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14.12.2006
CJSC «Odessa Cognac Factory» assigned uaBBB credit rating
"Credit-Rating", a nationally-recognized credit rating agency in Ukraine has today announced the assignment of the uaBBB long-term credit rating to Odessa-based "Odessa Cognac Factory" CJSC ("the company"). The main company`s activity is production of cognac. In the course of the rating analysis the "Credit-Rating" agency used Issuer`s 2001-2005 1H 2006 financial report, as well as other inside information furnished by the company.
The uaBBB issuer rating reflects adequate capacity of an obligor to timely and in full pay the given debt liability in the Ukrainian financial market environment, there is, though, a higher vulnerability to the effect of adverse changes in business, financial and economic conditions as compared to the debt liabilities with higher ratings.
Factors supporting the credit rating
- The company operates on the basis of the same-name factory with the 140-year experience in wine-making.
- The company takes 22% of the domestic cognac market, which has grown over the past few years (2005 growth rates were 24% as compared to the similar period of the previous year, the 1H 2006 saw 21% of growth rates as compared to 1H 2005)
- Improvement in number of financial and economic activity company`s indicators over the past few years, specifically the EBITDA profitability has increased from 19.97 to 34.92 over 2003-2005, and financial independence from 0.42 to 0.57
- The company has a great potential for further production growth due to conducted modernization and setting in operation new and additional utilization of existing production facilities.
Factors constraining the credit rating
- The cognac production requires working funds distraction for a significantly long term (the cognac spirits ripening is to be not less than 3 years), which will lead to debt burden raise, taking into account the planned sales growth.
- Raising competition in all segments of Ukrainian wine products market, namely the company`s specific gravity on cognac market decreased over 2005 by 4 percentage points.
- Company`s dependency on a single distributor, which is incorporated into another group of companies, which is in its turn involved in alcohol products production and selling.
- Company`s high dependency on state regulation of Ukrainian wine market.
Information on all the credit ratings assigned in accordance with the Ukrainian national scale may be found in the REUTERS and BLOOMBERG information systems.
For further information, please contact:
Information and analytic department
Sergey Rozumyak +38 044 490 25 50
SRozumyak@credit-rating.com.ua
