Come 2016, Fitch Ratings expressed confidence in top retailing entities in the country, which include Singer Sri Lanka PLC and Abans PLC, showing further improvement in leverage.
The two Fitch-rated entities, which have a current outlook of A-(lka)/Stable (Singer PLC) and BBB+(lka)/Stable PLC (Abans), will witness a boost largely due to improved free cash flow (FCF) generation amidst increased profitability and low capex requirements.
“Solid top-line growth and margin improvements have helped the two companies lower their leverage in 2015 from highs in 2014,” stated the rating agency.
However, it was pointed out that Singer’s improvement may be set back to an extent by its acquisitions in 2015.
Furthermore, the liquidity profiles of the two rated retailers are observed to have improved as the low interest-rate environment has allowed them to replace short-term financing, mainly of commercial paper, with long duration debt.
Substantial unutilised but committed credit lines available for both Singer and Abans acknowledged to have helped in providing further support to liquidity.