Fitch Declares Kraft Heinz's IDR At 'BB+'; Outlook Stable
International rating Agency Fitch has confirmed the long-term Issuer default rating (IDR) of one of the world's largest food producers Kraft Heinz company at the level of "BB+" and the short-term IDR at the level of "b," the Outlook on the ratings is stable, the Agency said in a statement.
"The ratings reflect Kraft Heinz's large scale company with annual sales of $25 billion, EBITDA margin of 20% or higher, and high cash flow generation, which balances the increased amount of borrowed funds," the report said. The Fitch Agency notes that Kraft Heinz is highly dependent on the North American market, which accounts for about 80% of sales and 75% of the company's EBITDA. Also, 10-10% of revenue comes from Europe, the Middle East, and Africa (EMEA) region.
The Agency predicts that Kraft Heinz's revenue in 2020 will be about $25.5 billion, reflecting continued increased demand for the company's products due to the coronavirus. "In the absence of asset sales, revenue is expected to decline to $24 billion in 2021, representing an organic decline in sales of approximately 6% as normal sales volumes recover," Fitch wrote in a statement.
The Agency adds that further rating actions against the company will depend on the future dynamics of its revenue and the company's EBITDA.
Kraft Kraft Heinz has set a long-term organic revenue growth target in the range of 1-2%.
Kraft Heinz was founded in March 2015 after H. J. Heinz merged with Kraft foods group. It is the third-largest food and beverage producer in North America and the fifth-largest in the world. The company's portfolio includes brands such as Kraft, Heinz, ABC, Capri Sun, Classico, Jell-O, Kool-Aid, Lunchables, Maxwell House, Ore-IDA, Oscar Mayer, Philadelphia, Planters, Plasmon, Quero, Weight Watchers Smart Ones, and Velveeta.