Fitch mulls effect of earthquake on Chilean food, beverage sector

Fitch Ratings said it is evaluating the immediate effects as well as the longer-term impact that Chile's catastrophic earthquake and tsunami on Feb. 27 may have on the operations and financial profile of the companies within the Chilean food and beverage sector.

The agency covers three Chilean Coca-Cola bottlers, Embotelladora Andina SA, Coca Cola Embonor SA and Embotelladora Coca Cola Polar SA; one brewer, Compania Cervecerias Unidas SA; two wineries, Vina Santa Rita SA and San Pedro Tarapaca SA; and four food producers, Empresas Carozzi SA e Industrias Carozzi SA, Invertec Foods SA, Watt's SA and Empresas Iansa SA.

The earthquake affected each company differently, depending on its location and type of business. Fitch said beverage companies that reported damage to some of their facilities are making an effort to compensate by increasing the capacity utilization rate at their remaining plants. While this may have a slight impact on profitability levels, the strategy should allow the affected companies to maintain their market share, in the agency's view.

The agency said the Coca-Cola bottlers and Compania Cervecerias Unidas all enjoy high liquidity and strong cash flow generating capacity and should therefore be able to finance an increase in expenditures related to the earthquake.

Fitch-rated wineries not only exhibit a solid financial profile and an adequate amortization schedule but also belong to large economic groups, which provides additional financial comfort, the agency said.

Fitch does not expect the rated food companies to undergo financial stress as a result of the earthquake.

The agroindustrial sector, on the other hand, is facing significant challenges in meeting its business commitments as a result of losses in finished products and difficulties exporting these products, the agency said.

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