CHICAGO--(BUSINESS WIRE)--U.S. and EMEA packaged food companies have strong liquidity and free-cash-flow (FCF) that should allow them to maintain leverage appropriate to ratings in 2015 despite a still-difficult operating environment, according to Fitch Ratings. Fitch's rating and sector outlooks are both stable.
In 2015, Fitch expects food companies to focus on accelerating weak top-line and volume growth with product innovation that resonates better with increasingly health-conscious consumers. However, growth may again prove elusive in a mostly low input cost environment that does not allow for much pricing, and a still-heightened promotional environment.
Fitch believes the greatest risk to U.S. food companies' credit profiles is higher leverage resulting from debt-financed acquisitions or shareholder friendly activities to the detriment of debt holders.
Profit margins of large European food companies should improve despite the headwinds from various declining food categories and difficult geographical markets. This is driven by food companies' capabilities in innovation extending food categories into more premium space. In addition, cost rationalization and efficiencies programs are expected to continue in 2015.
The full '2015 Outlook: U.S. and EMEA Packaged Food' is available at 'www.fitchratings.com.' Fitch's outlook reports for other sectors and regions are also available.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research: 2015 Outlook: U.S. and EMEA Packaged Food (U.S. Improvement, Eurozone Still Weak, but Offset by Emerging Markets)