Fitch Ratings has revised the outlook on Sri Lanka-based footwear and tyre manufacturer and retailer DSI Samson Group (Private) Limited (DSG) to positive from stable and has simultaneously affirmed the National Long-Term Rating at ‘BBB(lka)’.
The Outlook revision reflects the possibility that DSG’s rating could be upgraded in the next year or two if it sustains its current improvement in leverage, defined as net adjusted
debt/EBTIDAR, at below 4.5x. Leverage fell to 3.8x in the financial year ending March 2019 (FY19) and to 3.5x in 6MFY20 on better efficiencies and a move to value-added products in its
footwear business. However, DSG’s tyre business continues to face challenges and may pose significant downside risk to our forecasts. DSG’s rating reflects the company’s leading positions in domestically sold and manufactured pneumatic tyres to the replacement market and footwear, which are supported by its well known brand and island-wide distribution network.
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