The salmonella affair reaches the Strauss Group credit rating. Midroog announced today (Monday) that it is examining the company’s rating with “negative consequences”. This announcement indicates that the food giant’s rating may drop soon.
Strauss currently has a credit rating close to perfect. Its two bond series are rated Aa1.il, which has an equivalent of AA + on a Standard & Force scale.
“The ranking is being examined following the company’s reports of the discovery of several samples with salmonella at the company’s candy factory in the Galilee landscape,” Midroog noted. “The step that led to the call to return (recall) all of Strauss’ products to the plant, led to the shutdown of some of the company’s operations for a period of three months or until the defects were rectified.”
Midroog states that it intends to examine “the implications for the rating with an emphasis on the financial parameters and business positioning of the company, and this also depends on developments regarding the aspects of risk management following the said event.”
The damage to the ranking may come due to a negative impact on the company’s revenue over time and its current profitability. All of these may affect “the financial profile of the company, as a result of, among other things, the provisions that the company will make in respect of this event as well as the effect on the coverage ratio”.
Still one of the most stable companies in the economy
However, Strauss is still considered one of the most stable companies in the economy. The rating company notes positively that Strauss’ rating is based on “strong financial positioning thanks to high cash flows and moderate leverage, with a significant operating turnover of NIS 8.8 billion and an operating profit neutralized depreciation and amortization (EBITDA) of NIS 1.3 billion in 2021.”
Stock Strauss Fell by 3.1% today, a decline that is probably due to the negative trend that hit all the Tel Aviv Stock Exchange indices today. The Strauss share completes a decline of close to 7% since the beginning of the year, with the company’s market value standing at NIS 10.2 billion. In terms of market capitalization, Strauss Group is the 18th largest company in Tel Aviv.
Strauss has two series of shekel bonds (Series E andSeries F ), The balance of which together amounts to NIS 1.2 billion. The yields of the two series stand at 3.2 and 8 years respectively, and their yield stands at 2.7% and 3.66% respectively.