Abrau-Durso Earned High Credit Ratings

In August 2024, Abrau-Durso PJSC, the Abrau-Durso Group’s managing company, was highly rated by the leading rating agencies: A+ (RU) Stable by Analytical Credit Rating Agency (ACRA) and similar ruA+ with stable outlook by Expert RA. The key positive factors include profit and sales growth, high profitability and geographic diversity. The analysts also noted the company’s strong competitive position, strong liquidity, low debt burden and corporate risks, and availability of extensive own resource portfolio.

The Abrau-Durso Group is a leading producer of sparkling and champagne wines in Russia (Russian Sparkling, Abrau Durso Reserve, Victor Dravigny, Brut d’Or, Imperial, etc.). The wide product range of the company also includes still wines, Abrau Light beverages, ciders, artesian water, non-alcoholic beverages and energy drinks. A separate spirits business, Abrau Spirit, has been established with the portfolio consisting of gins 7 Herbs and Chameleon, bitter 7 Vegetables, vodka 7 Grains, original Cuban rum Danza del Fuego, as well as cognacs. The production facilities in Russia consist of 4 main assets: Russian Wine House Abrau-Durso, Loza Plant, Yubileinaya Winery in the Krasnodar Krai and Vedernikov Winery in the Rostov Oblast. The Group also actively develops the tourism, restaurant and own retail businesses. Abrau-Durso resort is the largest center of wine tourism in Russia.

The agency analysts refer to growth of profit before excise taxes in unfavorable environment as one of the strengths of Abrau-Durso PJSC. It was 1.8% under IFRS in 2023. This was mainly due to sales volume growth. At the same time, the unfavorable price trends due to significant volumes of the import sparkling and still wines imported in Russia before the duty increase in August 2023 kept down the Abrau-Durso profit growth.

The analysts noted the company’s strong market position and high geographic diversity. Abrau-Durso has over 200 contracts with the regional distributors and the largest federal retail chains, which ensures presence of the products in all Russian regions. The high level of sales diversity is maintained due to the distribution channels expansion. These processes are also supported by the Russian laws aimed at developing the domestic winemaking industry. Another strength is the extensive own resource portfolio. Today the Abrau-Durso Group owns 3.7 thousand ha of vineyards and 6.3 thousand ha of vinelands.

The analysts particularly noted the high level of corporate governance at Abrau-Durso. The company has the key management bodies and the approved decision-making policies and procedures. The development strategy was evaluated positively due to the increasing vertical integration and expansion of the product portfolio. Risk management is also highly evaluated as the company has the documented standards for different kinds of risk. Abrau-Durso has high financial transparency.

The low debt burden and strong liquidity with the average cash flow also contributed to the credit rating improvement.

The measures and processes above predetermined the creditworthiness and financial standing of Abrau-Durso PJSC which enabled the assignment of the credit ratings. On August 26, Analytical Credit Rating Agency (ACRA) increased the credit rating of Abrau-Durso PJSC by A+(RU) Stable. It is separately indicated that the “stable” outlook assumes that the rating will highly likely stay unchanged within the 12 to 18-month horizon. On August 13, rating agency Expert RA affirmed credit rating of non-financial company Abrau-Durso PJSC at ruA+ with stable outlook as well. The credit rating was improved by Expert RA in August 2022 for the first time and remains unchanged for 2 years.

For reference:

Credit Rating Agency Expert RA was founded in 1997 and is currently Russia’s oldest and largest credit rating agency. Expert RA is in the Bank of Russia’s Register of Credit Rating Agencies. It also features in the lists of independent verifiers under the green and social bonds standards, hosted by the International Capital Market Association, the Moscow Exchange and VEB.RF. Being rated by Expert RA is among the official requirements imposed on banks, insurers, pension funds, and issuers. Expert RA ratings are used by the Bank of Russia, Ministry of Finance, Ministry of Economic Development, Moscow Exchange and thousands of other companies and authorities during competitions and tenders.

Link to credit rating assignment: https://raexpert.ru/releases/2024/aug13a

Analytical Credit Rating Agency (ACRA) was founded in 2015. 27 largest Russian companies representing the financial and corporate sectors are the shareholders of ACRA. The authorized capital of ACRA exceeds RUB 3 billion. The Agency’s main objective is to provide the high-quality rating product to users in the Russian rating market. The Agency’s methods and internal documents are in compliance with the latest Russian regulatory requirements and best global rating practices.

Link to credit rating assignment: https://www.acra-ratings.ru/press-releases/5031/?lang=ru