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S&P assigns BB- prelim rating to Serbia's Agri Europe - MK Group

S&P assigns BB- prelim rating to Serbia's Agri Europe - MK Group Source: FAO; Author: Igor Pavicevic

BELGRADE (Serbia), February 5 (SeeNews) - Serbian vertically integrated conglomerate MK Group said on Monday that Standard & Poor's has assigned a preliminary BB- long-term corporate credit rating to its subsidiary AEC Agrinvestment Limited (Agri Europe), with a "stable" outlook.

In this way, MK Group becomes the only company in Serbia that has received credit rating for its agricultural business activities in the country, the conglomerate said in an e-mailed statement. 

"The agribusiness activities of Agri Europe generated revenues of 639 million euro in 2016. Agri Europe has a dominant position in its domestic market, a low operating cost structure, and high profitability compared to regional peers. Its small asset base, high concentration in one region of Serbia, and high volatility of profitability are rating constraints," the company quoted S&P as saying.

The stable outlook reflects the view of S&P that the low operating cost structure, high profitability in sugar, and controlled capital expenditure should support free cash flow generation in 2018, according to the statement. 

"We project positive cash flow in 2018-2019 of about 60 million euro-80 million euro, assuming no large negative working capital swings. We think that the group will be able to deleverage to S&P Global Ratings-adjusted debt to EBITDA of about 3.5x in 2019, from 4.5x in 2018," S&P was quoted as saying.

The assigning of a corporate credit rating to Agri Europe is an amazing success showing that the company is operating according to the European standards, the chairman of the firm, Miodrag Kostic, said in the statement.

"We are particularly satisfied with the rating of BB- by the rating agency S&P Global, since, according to the agency, the rating of the Republic of Serbia is at the level of BB and Agri Europe’s company MK Group is practically the only Serbian company that has a credit rating for all business activities from the agrarian domain that is being implemented in Serbia," Kostic said.

Cyprus-based Agri Europe processes sugar and meat products and is also engaged in farming operations in Serbia and Ukraine. Agri Europe employs around 7.000 people in permanent, part-time and seasonal roles in 40 companies, according to data from its corporate website.

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