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RPT-Fitch Affirms Berlina rating at 'A-(idn)'; Outlook Stable
June 20, 2013 / 8:33 AM / 4 years ago

RPT-Fitch Affirms Berlina rating at 'A-(idn)'; Outlook Stable

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June 20 (Reuters) - (The following statement was released by the rating agency)

Fitch Ratings has ranked reassignNational Long-Term from PT. Berlina Tbk (Berlina), a manufacturer of packagingplastic, at ‘A-(idn)’ with a stable outlook.

This assertion reflects Berlina good credit metrics, its position asplastic packaging manufacturer in Indonesia and the strong relationships that have longintertwined with its main client, PT Unilever Indonesia Tbk. ratings are constrainedby Berlina-scale and capital-intensive activities.

Factors Affecting Rating:

Stability margins: Fitch expects to maintain EBITDA margin Berlinastable around 17% -18%, periodic price adjustments reflect theits customers. Berlina price mechanism allows for chargefluctuations in raw material prices and exchange rates to its customers.

Concentration of positive Unilever: Berlina get 68% of revenue in 2012of PT Unilever Indonesia Tbk, which is 85% owned by UnileverNV / Unilever PLC (A + / Stable). Fitch Berlina dependence on Unileveras a positive, given a good credit profile of Unilever anddominant position and strong growth potential in the fast-moving sectorconsumer goods in Indonesia.

Strong credit metrics: Credit metrics from very strong to Berlinaranking. Debt level of the company as measured by net debt / EBITDAamounted to 1.4x in 2012, has not changed much from 2011. Fitch estimatesBerlina will maintain a financial profile in accordance with the rankingin the medium term, in the midst of a major capital expenditure and potentialexpenditures for the acquisition in 2013. Although there is a risk that the level of debtBerlina will rise above the negative guidance Fitch in 2013, Fitchestimates that it will not be sustainable.

Adequate Liquidity: Berlina generate sufficient internal cash tomanage long-term debt maturities and Fitch will assess Berlinaable to extend the short-term debt facility (CAD 83milyar onend of December 2012). The current long-term debt amounted to EUR 52milyar inend of December 2012 and Fitch expects the company’s operating cash flow will behigher than 2012. However, Berlina require external fundinggreat for large capital expenditure in the medium term. Fitchassess the company will be able to obtain the necessary funds given profilefinances.

The scale and intensity of capital spending: Fitch expects free cash flow / free cashflow (FCF) Berlina to remain negative in the medium term given the needhigh capital expenditures to remain competitive and retain market shareFMCG industry in Indonesia and China are continuing to grow. Continuous investmentwill also improve the efficiency of current operations. However,the company has some flexibility to defer capital expenditure separately whendeclining demand. Although Fitch notes additional capital investments are usuallydone after the contract of sale is made.

Factors Initiator Level:

- Failure to maintain plant utilization rates above 70%

- The weakening of the net debt / EBITDA above 2x on an ongoing basis, due to theAnother margin pressure.

Positive: future developments that individually and collectively canraise levels:

- Actions positive fractionation predicted did not happen in the longsecondary time given the scale of the small business enterprises thananother higher level.

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