Fitch affirms Melstacorp and subsidiary Distilleries at ‘AAA(lka)’; Outlook Stable

Fitch Ratings has affirmed the National Long-Term Ratings of Sri Lanka-based conglomerate Melstacorp PLC and its subsidiary Distilleries Company of Sri Lanka PLC (DIST) at ‘AAA(lka)’. The Outlook is Stable.

The ratings on Melstacorp and its stronger subsidiary DIST are based on the consolidated credit profile of Melstacorp, in line with Fitch’s Parent and Subsidiary Linkage Rating Criteria.

Melstacorp’s rating reflects Fitch’s view that the group will maintain a strong credit profile despite modest demand conditions for its core spirits business, which accounts for around 65 percent of the group’s EBITDA. Fitch said it expects the group to be conservative in its investments, preserving most of the large free cash flow to strengthen its credit profile.

Fitch included Melstacorp’s 51 percent share of its subsidiary Aitken Spence PLC but excluded its insurance business Continental Insurance Lanka Limited (National Insurer Financial Strength: A(lka)/Positive), in assessing Melstacorp’s credit profile.