S&P lifts Fufeng to positive

S&P said it revised the outlook on Fufeng Group Ltd. to positive from stable.

The agency also said it affirmed the BB+ long-term corporate credit rating and cnBBB+ long-term Greater China regional scale rating on the company.

The outlook revision reflects an expectation that Fufeng will improve its profitability over the next 12- to 24-months despite operating in a maturing industry, S&P said.

The company also is expected to reduce capital spending over the period, the agency added.

Fufeng's free operating cash flow will turn positive, reducing the debt-to-EBITDA ratio to less than 2x and increasing the ratio of funds from operations (FFO) to debt to more than 45% on a sustainable basis, S&P explained.

The margin improvement is driven by the company's recent investments to increase operating efficiency at its monosodium glutamate (MSG) production facilities, the agency said.

Declining corn prices, a major input for production of MSG and xanthan gum, should also support margins, S&P added.

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