Moody's revises Bimbo outlook to stable
December 11, 2009
by Josh Sosland
MEXICO CITY — Reflecting the company’s “solid positive cash flow,” the credit rating outlook of Bimbo S.A.B. de C.V. has been revised to stable from negative by Moody’s de Mexico. The agency affirmed Bimbo’s senior unsecured Baas and Aa2.mx ratings. Moody’s said the cash flow trends have “reduced near-term refinancing risks.” In late November, Bimbo announced it had repaid $300 million of debt, related to its acquisition of the fresh bakery business of Weston Foods in January 2009. The Moody’s outlook also reflects improved credit metrics and expectations of further balance sheet improvements in the near to medium term. “Bimbo's revenues and earnings have grown materially in recent quarters because of the addition of BBU East to the company's U.S. business,” Moody’s said. “Bimbo's margins improved in the U.S. and on a consolidated basis mainly because of BBU East’s higher profitability relative to the legacy business in the western U.S. (now BBU West). Margins were also helped by better profitability at BBU West and lower commodity costs, which more than offset soft volumes and higher marketing spending in light of continued weak consumption trends and an increasingly promotional environment.” Also underpinning Bimbo’s credit ratings are the company’s “high-margin baked good franchise in Mexico” and geographic diversification, Moody’s said.