Expert RA, Russia`s largest ratings agency, upgrades BELUGA GROUP`s rating

april 12 /2022

Rating agency Expert RA has upgraded the credit rating of BELUGA GROUP to ruА+ with a stable outlook. The сompany's previous rating was ruA with the same outlook.

According to the Expert RA official statement, “the rating was upgraded due to the agency's expectations to maintain upward trend in BELUGA GROUP's financial performance. The alcohol industry is one of the least affected by crisis in the economy. The сompany's business is focused on the domestic market, the share of export deliveries of manufactured products for 2021 (hereinafter referred to as the "reporting period") amounted to 8%, and the сompany's current strategy is oriented on the domestic consumer.

During the reporting period, the share of imported products in the revenue of the distribution and production segments amounted to 36%, while the company imports over 100 brands from 18 countries, which is an evidence of a high level of diversification. In Q1 of 2022, the group formed extra stocks of both imported products in warehouses in Russia, and domestic products in export markets. A potential decrease in sales volumes in physical terms may be offset by higher prices, the growth of which is fully transferred to the end consumers.

BELUGA GROUP primarily focuses on clients with an upper-middle income level. Considering the refusal of some foreign premium brands to supply their products to Russia, the company has the option for additional capacity utilization to increase output in order to substitute reduced import volumes and meet domestic demand”.

The agency highly appreciates BELUGA GROUP's market standing and its diversified brand portfolio, which ensures the company's leadership in key alcohol segments. With a main focus on premium segments, the group ranks first in the spirits production in Russia, including vodka, liqueurs and whiskey, and is among the Top-4 vodka producers worldwide.

In addition, the company's forecasted liquidity position is positively assessed: a significant amount of expected operating cash flow within next 12 months and a considerable free cash flow position fully cover planned capital expenditure program to support and further develop the group’s busines, service and repayment of debts.

СЕО of BELUGA GROUP Alexander Mechetin commented on this event as follows: "The upgraded rating reflects the company's sustainable development. As noted by the agency, BELUGA GROUP's strategy, including business diversification, portfolio premiumization, and development of the wine business corresponds to the trends in the alcohol market, as well as its development pattern. Thanks to our own production, the development of imports and distribution, including our own WineLab chain, and professional team, we can flexibly adapt to consumer needs, offer popular products at optimal prices, quickly respond to changes in market environment, and be resilient to new challenges".

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