November 17, 2017 / 6:17 PM / a month ago

Fitch: LatAm Non-Alcoholic Beverage Sector Credit Profiles Weaken

(The following statement was released by the rating agency) Link to Fitch Ratings' Report: Latin American Non-Alcoholic Beverages — Peer Comparishere MONTERREY, November 17 (Fitch) Credit profiles weakened across the Latin American non-alcoholic beverage sector during the past four years, according to new research from Fitch Ratings. Debt-financed acquisitions, currency depreciations and challenging economic conditions across South America pressured cash flow generation and resulted in higher leverage ratios across the business cycle. "Though the LATAM beverage sector has slowed, we believe this trend has stabilized somewhat," said Rogelio Gonzalez, Fitch Director. "We expect that a recovery in the larger South American economies should lead to improvement in credit quality for the group." Organic growth remains pressured with volume declines in Argentina, Brazil, Colombia, Central America, Ecuador and Venezuela. Weak macroeconomic environments, higher taxes and unfavorable weather conditions resulted in lower demand for products in 2017. This trend is present in most companies across the board. Notably standouts are Coca-Cola FEMSA, S.A.B. de C.V. and Arca Continental, S.A.B. de C.V., which both experienced volume growth, thanks in part to positive dynamics in Mexico and the effect of consolidating recent acquisitions in Brazil and the U.S., respectively. Beverage companies in the region are actively analyzing M&A to grow businesses and capture synergies. For more information, the report titled "Latin American Non-Alcoholic Beverages - Peer Comparison" is available at www.fitchratings.com. Contact: Rogelio Gonzalez Director +52 8399 9100 Fitch Mexico S.A. de C.V. Prol. 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