Fitch revises Wens view to negative

Fitch Ratings said it revised Wens Foodstuff Group Co., Ltd.'s outlook to negative from stable and affirmed its issuer, senior unsecured rating and the rating on its bonds at BBB+.

“The outlook revision reflects uncertainty about the company's hog production recovery in 2021 with ongoing African swine fever (ASF) outbreaks in China. The slow recovery and associated low capacity utilization have weakened Wens's cost position, which may result in funds from operations (FFO) net leverage remaining above 1x. Even so, the affirmation is supported by Wens's sizeable operating EBITDA generation, protein diversification, moderate leverage profile and robust debt coverage,” Fitch said in a press release.

The agency said it sees Wens' margin facing pressure from 2021, on hog prices trending down and rising production costs. “Wens procured externally around 0.8 million in breeding stock and two million piglets to boost production. However, externally procured sows and piglets are more expensive than ones raised in-house,” Fitch said.

The agency noted the pandemic disrupted the live poultry trade and the food-service sector, which pushed prices down.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.