Axesor Rating raises the perspective of El Corte Ingles to positive from stable

01th October of 2019

Axesor Rating assigns El Corte Inglés a corporate rating of BB+ with positive trend based on the positive progress in the execution of its strategic plan. Madrid, October 1, 2019 Axesor Rating has reviewed El Corte Inglés's rating and assigns it a corporate RATING of BB+, raising the outlook from stable to positive. The Corte Ingles reached a consolidated turnover of 15,783 million euros and an adjusted EBITDA of 1.159 million euros in 2018. The company's activity is mainly focused on the Spanish market, where it is positioned as a leader in its activity as a retailer, a segment that represents the core business of the group and that represents more than 75% of its total sales. With the aim of reducing its exposure to the domestic market and, therefore, to the evolution of the Spanish economy, one of the main strategic lines of the company is to increase its presence in international markets, mainly through brands both with new openings (Sfera stores, for example) and via agreements with establishments with a similar business model. The group presents a portfolio of high-value assets with a GAV of 17.201 million euros. It highlights its level of diversification, both in the retailer and complementary activities, where the travel agency is framed, as well as technological and computer services and insurance and financial activity. After a few exercises in which the contraction of the Spanish economy conditioned its sales, turnover has improved in recent years with the consolidation of the economic recovery experienced. The Corte Ingles shows a favorable trajectory in its turnover and margins in recent years, which has been favored not only by this economic recovery, but also by measures implemented in recent years in the interests of an improvement in efficiency. At the end of the last financial year, the company was placed with an adjusted EBITDA margin of 7.4%. Its financing structure is characterized by a high financial autonomy, favored by the positive results it has achieved throughout its history, as well as by the reduction of indebtedness, mainly in recent years. It is also expected that it will continue to reduce its level of debt in the short and medium term. The adjusted DFN/EBITDA ratio stood at 2.9x at the end of 2018. The Corte Inglés has the capacity to meet its payment commitments, supported by a high level of disposition of liquid resources and its adequate liquidity situation, which is favored by its operational cash generation capacity and its ability to access liquid resources for financing their operations. Regarding the issuance of bonds made in December 2018 for a final amount of 690 million euros maturing in March 2024 and a coupon of 3%, Axesor Rating awarded it a requested rating of BBB-. El Corte Inglés advances positively following the measures implemented both from the business and financial fields. The established deleveraging strategy has enabled a favorable performance in the last financial year, which continues in 2019, supported by the advancement in its non-strategic asset de-investive strategy.