Home CSR/CSI Agusto & Co affirms Sundry Foods rating

Agusto & Co affirms Sundry Foods rating

by Goddie Ofose
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Rating Agency, Agusto & Co has affirmed A- rating to a food services giant in Nigeria, Sundry Foods Limited, with stable outlook.

A statement said this came nearly three weeks after an international rating agency, Global Credit Ratings, accorded SFL7 the national scale long-term and short-term issuer ratings of A-(NG) and A2 (NG) with revised outlook to positive.

In the report, Agusto & Co noted that the rating upgrade reflects SFL good profitability, moderate leverage, adequate working capital as well as good and sustainable cash flow position, supported by the company’s favourable trade terms with its customers and creditors.

The rating agency said other factors that influenced the latest SFL rating include aggressive expansion drive as well as the company’s good market position in the capacity of a leading player in the quick service restaurant industry with a stable and experienced management team.

It added that SFL cumulative operating cash flow over the recent three-year period (2019 – 2021) was enough to meet dividends and interest payments; therefore, in the rating agency’s opinion the company’s cash flow position is good and sustainable given its business model.

To buttress its point the rating agency said, SFL recorded a 75 per cent increase in revenue performance in the first quarter of 2022 from a similar period in the previous year, adding that SFL recorded an improved operating profit margin and profit before tax margins to 13.5 per cent and 11.2 per cent respectively (FYE 2020: 9.7 per cent, 7.5 per cent).

As at the reporting date, SFL posted a pre-tax pre-interest return on assets and pre-tax return on equity of 23 per cent and 51 per cent respectively.

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