Fitch Ratings Indonesia has revised consumer food and beverage manufacturer PT Mayora Indah Tbk's Outlook to Stable from Negative, and affirmed its National Long-Term Rating at 'AA(idn)'.

At the same time, Fitch has withdrawn all the ratings.

The Outlook revision reflects Fitch's expectation that Mayora's EBITDA margin will be sustained above 10%, with low EBITDA net leverage of less than 1.0x in 2023 and 2024. Mayora's rating is also supported by its strong brands, robust market position, and diverse portfolio.

'AA' National Ratings denote expectations of a very low level of default risk relative to other issuers or obligations in the same country or monetary union. The default risk inherent differs only slightly from that of the country's highest rated issuers or obligations.

Fitch Ratings Indonesia has chosen to withdraw the ratings on Mayora for commercial reasons.

Key Rating Drivers

Recovery in Margin: Fitch estimates Mayora's EBITDA margin to return to above 12% in 2023 and 2024, after falling as low as 9%-10% in 2021-2022 due to higher raw material prices. The company's stronger EBITDA margin will be supported by its ability to adjust prices as one of the market leaders. It is also supported by its ability to cut back on advertising and promotion (A&P) expenses without materially hurting its sales. Mayora's EBITDA margin improved to above 15% in 1Q23 on normalising raw material prices and lower A&P spending.

High Commodity Exposures: Mayora's profitability is subject to fluctuations in the prices of its main raw materials. Its manufacturing cost is driven by raw material and packaging costs, which together accounted for about 80% of total costs in the past three years. Mayora's raw materials include wheat, sugar, coffee and palm oil derivatives, of which around 30% are imported. However, this is mitigated by Mayora's export revenue.

Strong Brands to Support Growth: Fitch believes Mayora's strong brands, as it is the market leader in several product segment, will continue support its position in Indonesia's packaged food sector. Mayora's revenue rose by about 10% in 2022 despite lower A&P expenses of under 9% of total revenue (2021: 13%). We expect revenue to increase by more than 5% a year in 2023 and 2024 due to contained inflation and growth in the economy. Mayora's revenue growth in the longer run will be driven by its capacity expansion, especially in the biscuit and wafer segments.

Conservative Leverage Despite Expansion: Mayora is developing two new biscuit and wafer factories in Balaraja and Purwosari that will increase production capacity by 200,000 tonnes per year, or 30%. We expect capex to rise to above IDR2 trillion in 2023 from IDR1.5 trillion in 2022. However, free cash flow (FCF) is likely to be neutral in 2023, despite our assumptions of higher capex and dividends of above IDR750 billion, because we expect EBITDA margin to improve and working capital to be manageable. As a result, we expect Mayora's EBITDA net leverage to remain below 1.0x in 2023 (2022: 0.7x).

Geographical and Product Diversifications: Mayora generates around 40% of its sales from exports. The company exports its products to over 90 countries, such as the Philippines, China, and Vietnam. By product segment, packaged food accounts for about 55% of sales and packaged beverages 45%. However, each segment consists of various sub-segments, such as biscuits, wafer, candy and instant coffee, with each sub-segment carrying different products.

Derivation Summary

Mayora is rated at the same level as Indonesia's second-largest mini market operator, PT Sumber Alfaria Trijaya Tbk (Alfamart, AA(idn)/Stable). Both companies are market leaders in their respective sectors. Mayora has a better profitability profile with forecast EBITDA margin of 12%-13% over 2023-2024, while we expect Alfamart's margin at around 7%. This counterbalanced by Alfamart's quite stable profitability with no exposure to commodity prices, while Mayora's profitability is affected by movements in raw material prices.

Mayora's National Rating is one notch lower than that on PT Tower Bersama Infrastructure Tbk (TBI, AA+/(idn)/Stable), the third-largest cellular tower operator in Indonesia. Both have solid market positions in their respective sectors. While Mayora has a better financial leverage profile, with Fitch forecasting EBITDA net leverage of below 1.0x over 2023-2024, TBI has a stronger business profile that supports its higher leverage. The tower company benefits from solid cash flow visibility from long-term lease contracts, supported by a cost escalation clause, while Mayora's business is exposed to commodity price volatility and inflation pressure.

Key Assumptions

Revenue to grow by more than 5% a year in 2023-2024.

EBITDA margin of above 12% in 2023-2024 (2022: 10.7%)

Capex of above IDR2 trillion in 2023

Dividend pay-out ratio of 40%, in line with the historical level


No longer relevant as the ratings are being withdrawn.

Liquidity and Debt Structure

Ample Liquidity; Solid Funding Access: At end-March 2023, Mayora had IDR4.12 trillion in cash against around IDR2.6 trillion of debt maturing within 12 months, of which around IDR1.0 trillion are working capital facilities that can be rolled over. Mayora also has solid access to bank funding and the onshore debt capital market. It has various facilities from local and foreign banks. It is also a regular issuer in the domestic rupiah bond market.

Issuer Profile

Mayora is among the largest packaged-food companies in Indonesia. The company sells various products, such as biscuits, candy, wafers, chocolate, instant coffee and instant cereal.

Summary of Financial Adjustments

Fitch has added back the unamortised debt issuance cost to reflect the actual principal repayment at maturity.

Fitch has reclassified interest income from cash flow from investing activities to cash flow from operating activities.

Sources of Information

The principal sources of information used in the analysis are described in the applicable criteria.


The principal sources of information used in the analysis are described in the Applicable Criteria.

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