Creditreform Rating has affirmed the unsolicited corporate issuer rating of Nestlé AG as well as the unsolicited corporate issuer rating of Nestlé Finance International Ltd. at AA-. Creditreform Rating has also affirmed the unsolicited corporate issue rating of the long-term local currency senior unsecured notes issued by Nestlé Finance International Ltd. at AA-. These issues are included in the list of ECB-eligible marketable assets, which can be found on the ECB's website. The outlook for the ratings remains stable. For more details regarding the ratings, please refer to our update report below.
Creditreform Rating has confirmed Nestlé S.A.'s unsolicited corporate issuer rating at AA-. The outlook remains stable. With this rating, Nestlé continues to have a very high level of creditworthiness and a very low risk of default. Decisive for the confirmation of the rating are Nestlé's leading global market position, diversified product and brand portfolio, and its profitable business model with well-developed internal financing power, which is complemented by excellent access to the capital markets. Its focus on high-growth and high-margin business areas, and the transformation process that has been implemented consistently, lead to short-term burdens but should enable the Nestlé Group to achieve its strategic growth targets in the medium to long term - which is confirmed by the current business performance. However, the ongoing share buybacks and the high dividend payments totaling CHF 14.5 billion in 2020 put a strain on liquidity and equity. Despite increased net financial debt and a slight deterioration of individual financial ratios, the result of the financial ratio analysis for the past business year remained stable overall, which contributed to the confirmation of the rating.
Creditreform Rating has adjusted the corporate issuer rating of Nestlé AG from AA to AA-. The outlook remains stable. With this rating, Nestlé continues to have very high creditworthiness and a very low risk of default. Significant factors that lead to the rating adjustment are the increased level of debt and the partially debt-financed share buybacks that have been carried out since 2017 and which have led to significant liquidity outflows, an unfavorable development in the capital structure, and consequently to a deterioration in the results of the key financial ratios analysis. We also consider a significant improvement in the capital structure to be unlikely over the period of the current share buyback program until the end of 2022. Nonetheless, due to the Group´s global market position with a well-diversified product and brand portfolio that is adequately further developed through a high level of innovation and promptly adapted to customer needs, and its well-developed internal financing power complemented by excellent access to the capital market, we do not see any risk to the economic and financial stability of the Nestlé Group. Its focus on high-growth and high-margin business areas, and the transformation process that has been implemented consistently, lead to short-term burdens but should enable the Nestlé Group to achieve its strategic growth targets in the medium to long term. Against the background of the dynamically developing COVID-19 pandemic and the resulting global recession, temporary business losses and delayed target achievement cannot be ruled out.
Creditreform Rating has carried out an unsolicited corporate rating of Nestlé AG.