S&P downgrades Becle

S&P said it lowered its ratings for Becle SAB de CV and its senior unsecured notes to BBB- from BBB.

“After years of maintaining leverage well below 1.5x, Becle's adjusted debt to EBITDA reached 1.6x at year-end 2022 and 2.2x in the 12 months ended June 2023. The rise in leverage stemmed from the company's depleted cash balance in recent quarters,” S&P said in a press release.

Appreciation of the Mexican peso versus the U.S. dollar, higher agave prices, higher advertising and marketing costs and higher working capital needs tightened margins for Becle.

“We expect EBITDA margins to gradually recover toward 22.5% in 2024, as we anticipate several operating tailwinds, including substantially lower agave prices (around Ps. 10 - Ps. 20/kilogram), easing inflationary pressures on other input costs (such as glass prices and distribution costs), and the company's lower inventory stock needs due to a normalized supply chain. We also expect these measures to lower working capital needs in the short to medium term,” S&P said in a press release.

The outlook is negative.

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