Financial ratings agency Standard and Poor's (S&P) says JBS SA has a stable outlook, and says the Brazil-based poultry and meat processor should successfully complete its proposed acquisition of Seara Brasil, a pork and poultry company being sold by rival company Marfrig. Standard and Poor's gave JBS a stable BB rating.
According to Flávia Bedran, primary credit analyst of S&P, the agency believes JBS will be able to improve operations and cash flows from Seara. The improvement in JBS' rating, according to S&P, reflects the company's consolidation of its businesses and its strengthening portfolio with the acquisition of Seara. The agency also highlighted that JBS' geographic and portfolio diversification has proven to be successful. S&P also expects that JBS will successfully integrate Seara, based on its track record with other acquisitions.
"The stable outlook reflects our view that JBS will gradually reduce leverage by improving cash flows in all business lines and lower debt as it generates positive free operating cash flows from 2014 onward," said Bedran. "We also expect that the company will be successful in improving Seara's operating performance and sustaining adequate liquidity upon the refinancing and extension of the debt assumed with the acquisition."