Fitch Ratings has upgraded to 'B+' from 'B' the Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) of
and its wholly-owned subsidiary Camposol S.A.
In addition, Fitch has raised Camposol S.A.'s senior secured notes to 'B+'/'RR4' from 'B'/'RR4'.
"Camposol's Recovery Rating is capped at 'RR4' due to the location of the group's operations; Fitch currently limits recovery ratings for corporates located in Peru to 'RR4'. This recovery rating reflects average recovery prospects," the credit rating agency affirms.
The upgrade proves Camposol's strong operating performance and robust credit metrics.
According to Fitch, the rating upgrade also shows Camposol's increased operational scale, more cash generative business profile due to a better mix of products and the expansion of the avocado, blueberry and shrimp businesses.
It adds the rating outlook is revised to stable from positive.
Key rating drivers
Leading Position in Peru: Camposol is a vertically-integrated producer in Peru of food products such as avocados, blueberries, tangerines, mangoes, grapes as well as shrimp.
Avocados, blueberries, and seafood represented 50%, 39%, and 9% —respectively— of Camposol's total gross profit in 2017.
The company controls the entire value chain: research and product development, growing fields and ponds, processing facilities, and sales and distribution channels. Camposol benefits from the worldwide trends toward the consumption of healthy and more convenient products.
Leverage: The company's credit protection measures are strong for the 'B+' rating category.
Within this framework, Fitch expects continued EBITDA growth due to higher volumes for blueberries.
The seafood profitability is expected to be impacted by lower prices sold in 2018. As of Sept. 30, 2018, 64% of planted fields are in high-yield phase.
Fitch expects gross leverage to be in the range of 1.5x-1.8x by the end of 2018, a slight increase from 1.4x during 2017 due to higher capex.
LTM EBITDA was at US$129 million as of Sept. 30, 2018. The group reported strong results in 2017 with EBITDA growing to US$125 million from US$76 million due to the strong performance of the company's avocado and seafood segments.