Corporate Credit Rating for PRADA S.P.A.: A3+ (First Issuance)

modeFinance published on the website cra.modefinance.com the Corporate Credit Rating (first issuance) of PRADA S.P.A. and the rating assigned to the entity is A3+.

The company has a good capability of meet its financial obligations. The high capitalization ensures low dependence on possible adverse macroeconomic conditions.

The reasons that have driven this decision are:

• The company has registered a very good situation over the considered period, with a very strong position in solvency and liquidity but a considerable contraction in profitability.
• Solvency is the strongest profile of the company: very low overall indebtedness, high capitalization and low financial indebtedness (even if considerably increased in the last FY). Also Liquidity is more than adequate.
• In the past FYs profitability has always been very high, but all over considered periods the trend was negative. The company, due to unfavorable macroeconomic condition of its operating sector, has seen its revenues stagnating/slightly decreasing, in face of an increase of operating costs. These factors have led to a contraction of operating margins, which have almost halved in the round of three FYs.
• For the present rating it has been analyzed the positioning of the company within its pertaining sector and main markets. In all considered areas (solvency, liquidity and profitability) the company has registered values equal or stronger than median values of the peer group.
• As per the macroeconomic scenario, Italian economy is recovering, but at a lower rate than expected. Hong Kong's open economy (The company's stocks are listed on HK stock-exchange) left it exposed to the global economic slowdown that began in 2008. Although increasing integration with China through trade, tourism, and financial links helped it to make an initial recovery more quickly than many observers anticipated. This scenario might put even more pressure on the Company's revenues.
• The Group has a worldwide presence with a very good brand reputation. It holds a leadership position in the market of luxury wearable products.

The present Corporate Credit rating is issued by modeFinance under EU Regulation 1060/2009 and following amendments.

The present Corporate Credit rating is Unsolicited: the rated entity or related third parties have not participated in the rating process and modeFinance has no access to accounts or other relevant internal documents of the rated entity or related third party.

Comprehensive information such as Rating Scales and Definitions, relevant policies and other disclosures on modeFinance Corporate Credit Ratings are available at: www.modefinance.com/en/rating-agency.

A comprehensive description of the Methodologies used is available at cra.modefinance.com/en/methodologies.

The quality of the information available on the rated entity and used to determine the present rating was judged by modeFinance as satisfactory. Moreover, the present credit rating was notified to the rated entity before publication in order to identify potential factual errors, as prescribed by the CRA Regulation.

Please note that the findings and conclusions that modeFinance delivers are based on public information gathered from both primary and secondary sources, whose accuracy we are not in a position to guarantee. As such modeFinance can accept no liability whatsoever for actions taken based on any information that may subsequently prove to be incorrect.

Andrea Sorrentino - Head Analyst
andrea.sorrentino@modefinance.com
+39 040 3756742

Eva Vocci - Assistant Analyst
eva.vocci@modefinance.com
+39 040 3756740

Pinar Dilek - Responsible for Rating Approval
pinar.dilek@modefinance.com
+39 040 3756740