Corporate Credit Rating for BARILLA HOLDING S.P.A.: A3- (Affirm)

modeFinance published on its CRA website the Corporate Credit Rating of BARILLA HOLDING S.P.A. and the rating assigned to the entity is A3- (Affirm).

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

The reasons that have driven this decision are:

• The overall financial and economic situation of Barilla Group is good in all analyzed areas and follows a positive trend, improving during the three-year period. Solvency is steadily improving, passing from good to very good levels in 2016. Shareholders’ funds constantly increase thanks to retained profits and leverage ratio is very good at 1.38; financial indebtedness too is very low. Liquidity settles at adequate levels, with both indicators that increase compare to the previous years. The Group has an adequate profitability, slightly increased compared to previous years. Despite the tougher and fragile economic scenario, Barilla managed to reach a 1% growth.
• The Group is able to generate cash resources widely capable of remunerating all the financing sources and to cover investments. Cash Flow is highly positive.
• The company is well positioned in terms of turnover where it is ranked at the 100th percentile of the distribution of the peer group. The solvency score could be improved (53/100) respect to its peer group and the profitability score is within the best companies of the same sector with a score of 83/100.
• Barilla is a well-established company with a long history, celebrating this year 140 years since foundation. The controlling company of Barilla Holding Spa is Guido M. Barilla E F.lli S.R.L. & C. SAPA. 2015 annual accounts of this company show a sufficient situation, with improved solvency and liquidity compared to previous year.
• Analyzing the industry’s creditworthiness, solvency of the peer group is worsening but it remains at a sufficient level, both for leverage and financial leverage. Liquidity ratios are stable at good levels, while profitability for the industry could be improved, settling at not sufficient levels. In all considered areas, Barilla Holding Spa outperformed the peer group, especially regarding profitability.
• The macro-economic conditions in Italy (the main country, at about a half of total operating revenues) are still weak with high unemployment rate (11.4%) and high public debt, but with a positive outlook for next years. EU economy (almost 1/3 of total revenues) is vulnerable and has not recovered yet, even if with an expected growth in 2017 and 2018. North American countries, (about 1/4 of total operating revenues), saw an improvement in 2016, with positive economic forecast. Despite the outlooks, the economic climate in all considered markets is still extremely uncertain.
• Italian food industry has seen a growth in 2016, mainly driven by exports (+4.3%) though the domestic market (the main one) remained stable, with a slight downturn.
• Italy started again a period of political turmoil and the government must keep on the reform agenda, in order to revive the long-stagnant economy. Donald Trump has claimed and he is carrying out protectionist policies that could also impact on imported goods from Italy with punitive taxes on imported goods (as estimated, they could put at risk 3.8 billion EUR exports). Barilla has two manufacturing plants in the US territory, so maybe the impact of these new policies will be less shocking for Barilla. Even if negotiations started on June 2017, Brexit has already brought to a 6.8% drop in food exports to UK in the first quarter of 2017, being pasta among the most important items imported. The impacts of all these events are not still fully predictable and it is still not measurable how these policies will affect the Group.

The present Corporate Credit rating is issued by modefinance under EU Regulation N. 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 this link.

A comprehensive description of the Methodologies used is available at this link.

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.

Chiara Di Piazza - Head Analyst
chiara.dipiazza@modefinance.com
+39 040 3756742

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