Weathering the Economic Storm in 2009

Despite the current dip in energy and agricultural ingredient costs, high financial leverage and weak cash-flow generation continue to negatively affect the commodity food industry, according to Fitch Ratings, a global rating agency. The company predicts 2009 will be another financially difficult year in the industry and recommends that companies in this arena should concentrate on maintaining liquidity and debt reduction vs. share repurchases and acquisitions in 2009, regardless of significant stock price declines and assets coming on the market. Until core operating margins improve and leverage declines, credit profiles for a number of companies will remain weak, say the Fitch analysts. Companies with a significant portion of higher-margin products are better-positioned to weather the storm.