International agency Fitch Ratings Upgrades BELUGA GROUP to BB-, Positive Outlook

june 21 /2021

Fitch Ratings has upgraded BELUGA GROUP's long-term foreign- and local-currency default ratings (IDRs) to 'BB-' and reviewed the outlook to positive. The company's previous rating was B+ with a stable outlook.

According to the agency's official statement: “The upgrade reflects a strengthening in the group's operating profile over the last five years. This is manifested in growing product diversification, profitability improvement, a doubling of scale and stronger leadership in its market position. The upgrade is also supported by significant deleveraging achieved in 2020.

The Positive Outlook reflects Beluga Group's shift to a more conservative financial policy leading to potential further de-leveraging, as well as our expectation that the business profile will continue strengthening over 2021-2024.

Proceeds from a recent share placement and our expectation of consistently positive free cash flow (FCF) in 2021-2024 should allow Beluga Group to maintain a conservative capital structure, which, subject to a further strengthening of its operating profile, may support a further rating upgrade.”

The agency highlighted the following key rating drivers: material shift in financial policy, improved profitability, faster growth for retail business, expected consistent positive free cash flow, strong market positions locally, performance of the flagship brand Beluga, and improving diversification.

Alexander Mechetin, Chief Executive Officer of BELUGA GROUP, commented as follows: «Strong operational and financial results and our recently presented strategy of sustainable development together with latest SPO were reflected in the independent Fitch Ratings experts’ actions. Our team is encouraged by the recognition of our efforts and the corresponding upgrade of the rating. We will continue to work on the efficiency of operations, risk management, corporate governance, strengthening the company's positions both in Russia and abroad, and company’s profitability – all in the interests of our stakeholders: employees, partners and investors.”

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