Bangkok--22 Oct--TRIS Rating TRIS Rating Co., Ltd. has affirmed the company rating of Berli Jucker PLC (BJC) at “A+”. At the same time, TRIS Rating has assigned the rating of “A+” to BJC’s proposed up to Bt1,500 million senior debentures. The rating outlook is “stable”. The ratings reflect the company’s solid market positions in key operating segments with a portfolio of strong brand names, cost competitiveness due to economies of scale in glass container and tissue paper manufacturing, and an experienced and capable management team. The ratings also take into consideration the company’s diversified business portfolio and strong relationships with suppliers and clients. These factors are partially offset by the highly competitive operating environment, especially in the consumer product sector; exposure to certain commodity price fluctuations; and regulatory concerns in the alcoholic beverage consumption, which might impact the sales of BJC’s glass bottles. The “stable” outlook reflects the expectations that BJC will continue to maintain its competitive strengths through economies of scale, product innovation, and ability to secure substantial orders of glass bottles from Thai Beverage PLC, one of the companies owned by the Sirivadhanabhakdi family. BJC is also expected to sustain its profit margins in the intermediate term and expand conservatively. TRIS Rating reported that BJC has been in business in Thailand since being established primarily as a trading company more than a hundred years ago. During 2001-2003, the company underwent a major organizational restructuring and TCC Holding Co., Ltd. (TCC), an investment holding company under the helm of the Sirivadhanabhakdi family, became its major shareholder. In 2006, BJC’s total sales were Bt15,173 million, growing by an average of 6% per annum since 2002. Main sources of revenues in 2006 were from consumer product segment, representing 39% of total sales, with packaging at 34%, and technical and industrial products at 23%. TRIS Rating said that One of BJC’s major strengths is its leading position in the glass bottle industry, a position it has held for decades. BJC ranks one of the top two largest glass bottle producers in Thailand, granting it with benefits from economies of scale. The customer base of this industry is solid. About 40% of BJC’s glass bottles were sold to TCC Group; the rest is used by a wide array of segments, such as food, energy drinks, and soft drinks. Most of the major clients have been with the company for more than 10 years. BJC’s strong business profile is also supported by its brand equity in tissue and snack food products, such as Cellox toilet paper and Tasto potato chip. The company is one of the largest tissue producers in Thailand and the second-largest snack-food manufacturer. The company’s key competitive edge in the technical and industrial product segment is its solid connections with suppliers and customers. BJC’s financial profile is strong. Cash flows have been stable. Aggressive capacity additions in glass and tissue production during 2004-2005 resulted in a moderate level of leverage. During the last three years, funds from operations to total debt ranged between 66%-73%, which is considered strong. Earnings before interest, tax, depreciation and amortization to sales remained in the range of 11%-14%. Operating margins continue to be pressured by intense competition, rising raw material costs, and higher fuel prices. Total debt to capitalization ratio was 23%-27%, but is expected to be weakened in the intermediate term with the debenture issuance to support the acquisition of a producer of two-piece aluminum cans and ends. TRIS Rating has already incorporated the likelihood of future business expansions through acquisition into the BJC’s credit profile and expects BJC’s financial profile to improve over times once the synergy from the acquisition in terms of EBITDA contribution and diversity is materialized, said TRIS Rating. For more information please contact: TRIS Rating Co., Ltd. (TRIS Rating) Tel: 66 (0) 2231-3011 Ext. 500, Fax: 66 (0) 2231-3012 E-mail: [email protected]