Research Update: Upfield (Sigma HoldCo B.V.) Downgraded To 'B-' On Slower-Than-Expected Deleveraging; Outlook Stable

Netherlands plant-based food producer Upfield (Sigma HoldCo B.V.) reported S&P Global Ratings-adjusted debt to EBITDA of close to 10.5x versus our projection of 9.0x-9.5x, with profitability hit by high raw materials, supply chain, and labor cost inflation, despite revenue growth. We now forecast Upfield will only marginally reduce adjusted leverage to about 9.5x in 2022, versus our previous expectation of 8.0x, amid soaring input costs (notably edible oils and packaging) and supply chain cost inflation that will continue to hit profitability, notwithstanding price increases, cost savings, and declining restructuring costs. Therefore, we lowered our long-term issuer credit and issue ratings on Upfield's parent Sigma HoldCo B.V. and the revolving credit facility (RCF) and term loan B (TLB) to 'B-' from

...- Netherlands plant-based food producer Upfield (Sigma HoldCo B.V.) reported S&P Global Ratings-adjusted debt to EBITDA of close to 10.5x versus our projection of 9.0x-9.5x, with profitability hit by high raw materials, supply chain, and labor cost inflation, despite revenue growth. - We now forecast Upfield will only marginally reduce adjusted leverage to about 9.5x in 2022, versus our previous expectation of 8.0x, amid soaring input costs (notably edible oils and packaging) and supply chain cost inflation that will continue to hit profitability, notwithstanding price increases, cost savings, and declining restructuring costs. - Therefore, we lowered our long-term issuer credit and issue ratings on Upfield's parent Sigma HoldCo B.V. and the revolving credit facility (RCF) and term loan B (TLB) to 'B-' from 'B'. - We also lowered the issue rating on the subordinated unsecured notes due 2026 to '###' from '###+'. - The stable outlook reflects our view that Upfield will adequately fund its...

Research Update