Fitch: Japfa view to negative

Fitch Ratings said it revised PT Japfa Comfeed Indonesia Tbk.’s outlook to negative from stable.

The agency also said it affirmed Japfa’s long-term issuer default rating at BB-, along with its national long-term rating at A+(idn) and the A+(idn) rating on its Rp 1.5 trillion bonds due in 2017.

Japfa’s senior unsecured rating and the rating on its senior unsecured dollar-denominated notes due in 2018 issued by Comfeed Finance BV also were affirmed at BB-.

The outlook revision reflects a view that Japfa’s financial flexibility is under strain amid an uncertain market outlook, Fitch said.

Weak demand growth and high supply led to thinner margins for Japfa in 2014, the agency said. As a result, its net debt-to-EBITDA ratio was 3.7x, exceeding the 2.5x negative rating action threshold.

Fitch said it expects the company to de-leverage to 2.5x by 2017, driven by earnings growth and underpinned by the robust long-term growth potential for the Indonesian poultry industry.

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