Ekosem-Agrar GmbH: Creditreform confirms CCC (stable) rating

Ekosem-Agrar GmbH: Creditreform confirms CCC (stable) rating

3 August 2017 Corporate News

Walldorf, 3 August 2017 – Creditreform Rating has confirmed the CCC rating with stable outlook of Ekosem-Agrar GmbH, the German holding company of Russian milk producer Ekoniva Group. The Group is generally said to benefit from a good business model, a strong market position and low cyclicality. Moreover, the current good business environment, the revenue growth in 2016 and the operating performance were rated positively. Creditreform is critical about the weak financial figures, the valuation and exchange rate effects of the rouble-denominated business as well as the growth-related increase in liabilities.

The latter is a consequence of the management’s deliberate decision to continue growing the company in view of the currently ideal conditions of a significantly higher milk price and the fact that the Russian government focuses its agricultural subsidies on the milk production sector. The expansion is subject to the very good framework conditions remaining unchanged. The company expects the ongoing expansion of its milk production activities to result in roughly 50% revenue growth in the current fiscal year.

Regardless of the economic stabilisation, Creditreform Rating continues to see an increased Russian country risk.