Koninklijke FrieslandCampina

Overview Key strengths Key risks One of the largest global dairy companies, with good product, channel, and geographical diversity. Increasing scrutiny in the Netherlands around dairy farms' nitrogen emissions could weigh on dairy product businesses? profits. Portfolio of well-known local and global brands provides pricing power. Foreign exchange volatility due to exposure to high-risk countries like Nigeria. Large presence in Asia and Africa with positive volume growth prospects. Negative demographics and high competition in China may limit growth prospects for the company's infant milk formula. Prudent financial policy supporting an S&P Global Ratings-adjusted debt leverage ratio close to 3.5x. Limited profit expansion due to ongoing efforts to optimize cost structure and operating efficiencies. Overall, RFC achieved strong credit metrics for

... or RFC) resilient operational performance in 2022 provides ample rating headroom. Overall, RFC achieved strong credit metrics for the current rating. Even though the company's free operating cash flow (FOCF) was negative, it had an S&P Global Ratings-adjusted debt-to-EBITDA ratio of 2.7x and a funds from operations (FFO)-to-debt ratio of 30% in 2022. RFC reported revenues increased by 22.4% in 2022, with all business groups contributing to growth. Revenues in the Food & Beverage division increased thanks to innovations, higher prices, and a rise in sales volumes to professional customers. Lower milk volumes and a time lag to pass higher prices to the consumer channel partly offset this development. The successful expansion into smaller cities in China and premiumization trends, which RFC managed to capture with its super-premium Friso Prestige brand, supported revenue growth in the Specialized Nutrition division. Revenue growth in the...

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