Standard & Poor’s: Kalina’s Rating Affected by Market Competition

Standard & Poor's placed the Russian cosmetics manufacturer Concern Kalina’s ruA+ national scale credit rating on CreditWatch, with Positive rating outlook.

The company’s rating is badly affected by the great competition on the Russian cosmetics and personal hygiene items market as well as by the relatively poor geographical diversity and its small business volume (small compared with its foreign rivals).

We feel the additional risks arise from the company’s insufficient liquidity indicators, its susceptibility to currency risks, low financial flexibility, and poor free CFO indicators,’ the agency explains.

We believe these risks are partially made up for by the stable business model, relatively high profitability, and the company’s ability to retain a significant share of the market in core business segments. We plan to take Kalina’s rating off our CreditWatch list in the next three months, during which time we expect to obtain some more detailed information as to Unilever’s future policy towards buying Kalina’s shares,’ Standard & Poor's reports.

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