Capital Intelligence (CI), the international credit rating agency, today announced that it had affirmed the Long-Term Corporate Rating at ‘BBB-’ and the Short-Term Corporate Rating at ‘A3′. Supporting the ratings are the diversified business model, the medium-to-long term nature of much of the Group’s funding, together with the availability of a substantial level of highly liquid AFS securities available to fund both debt service and ongoing capital expenditure commitments. Although not yet a supporting factor in itself, there is also the probability of improved earnings performance from 2014 onwards.
Constraining the ratings is the high and rising levels of both debt and leverage, the still vulnerable underlying level of earnings and weak cash flow, and the heavy CAPEX commitments that will now continue out to 2016. Although in the medium-term there is the prospect of significantly improved earnings once investment properties currently in development become income producing, pressures on both cash flow and earnings are expected to continue in the short-term. The Outlook on both ratings is ‘Stable’ – indicating that CI does not expect to alter the ratings at the time of the 2015 review.
For the ratings to come under upward pressure would first require that the group significantly reduce both debt and leverage. Also required would be a significant improvement in overall cash flow and in particular, operational cash flow. Finally, profitability would need to show a marked improvement – and one that was not as dependent upon valuation gains as is the case at present. Downward pressure on the ratings would appear unlikely at this point, unless there were a major adverse development.
Qatar-based Almana Group W.L.L. was founded 1960. It has a diversified range of businesses that include contracting, furniture, auto agencies, vehicle leasing, manufacturing and real estate. More recently however the main emphasis has been on the very successful auto-related businesses and on the real estate activities as the Group develops it substantial existing land bank.