Fitch affirms Molinos Rio de la Plata

Fitch Ratings said it affirmed the local-currency issuer default rating of Argentina-based Molinos Rio de la Plata, SA at BB-.

The outlook is stable.

The agency said the ratings reflect the company's ability to earn dollar-based revenues through exports and a leading business position in domestic branded food products. Margins recovered from 2004 across Molinos' oilseed-crushing activities and in branded products, translating into higher EBITDA for 2006, and during the six months ended June 30, revenues grew by 65% following the capacity expansion of the San Lorenzo plant.

The ratings are constrained by the cyclicality of operations due to the volatility of crushing margins, Fitch said. Additionally, Molinos' leverage is high as it requires important levels of working capital to fund inventory purchases and carryover. Short-term debt is seasonal and increases substantially during the April-June soybean harvest due to peak oilseed purchases. At June 30, total debt reached $392 million, an increase from $377 million at Dec. 31, 2005.

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