Our 'BBB-' issuer and issue ratings on Nortura SA (Nortura) are unchanged following the publication of its results for the first four months of 2022.
Market shares and revenues increase, but increasing costs reduce EBITDA
Nortura reported revenues of NOK 8.5bn for the four months to April, an increase of 6% from the corresponding period a year earlier. The increase was mainly driven by increased sales to the hotel, restaurant and catering sector as a result of fewer COVID-related restrictions. Revenues from industry sales also increased, while sales to the grocery sector declined, mainly due to an increase in cross-border trade. While Nortura's Gilde brand gained market share in a declining grocery market, the Prior brand lost market share due to biological production problems.
Nortura reported EBITDA of NOK 42m for the first four months, compared with NOK 144m in the corresponding period of 2021. The company's NCR-adjusted EBITDA margin was 2.76% (3.57% previously). Increased energy and transportation costs had a negative impact on the result, with energy costs alone totalling NOK 95 million in the period under review. In addition, the cost of other input factors such as packaging and ingredients have increased significantly over the past year. Meat and egg prices are likely to rise significantly in July; we believe Nortura is likely to increase prices by more than costs to offset expected cost inflation in the second half. We therefore expect higher margins in the remainder of the year.
Net debt higher on increased factoring
Net interest-bearing debt increased by NOK 0.6bn in the first four months, driven by increased factoring. Nortura's credit metrics were also negatively impacted by the fall in EBITDA, which we believe was transitory and driven by lag effects (prices are adjusted only in February and July each year).
Figure 1. Nortura key credit metrics, 2019–T1 2022
NOKm | 2019 | 2020 | 2021 | LTM to 30 Apr. 2022 |
---|---|---|---|---|
Total revenue | 23,728 | 24,723 | 26,614 | 27,097 |
NCR-adj. EBITDA | 818 | 883 | 797 | 747 |
NCR-adj. net debt | 3,057 | 2,755 | 2,335 | 2,901 |
Total assets | 9,316 | 9,221 | 9,272 | 9,322 |
NCR-adj. net debt/EBITDA (x) | 3.7 | 3.1 | 2.9 | 3.9 |
NCR-adj. EBITDA/net interest (x) | 7.6 | 8.3 | 7.6 | 4.8 |
NCR-adjusted FFO/net debt (%) | 22.2 | 27.5 | 27.8 | 23.0 |
NCR-adjusted FOCF/net debt (%) | 11.0 | 11.4 | 6.3 | 17.7 |
This commentary does not constitute a rating action.
Contacts:
Geir Kristiansen, analyst, +4790784593, geir.kristiansen@nordiccreditrating.com
Ylva Forsberg, analyst, +46768806742, ylva.forsberg@nordiccreditrating.com