The credit ratings agency, a few weeks back, said it expected that Alltech's “operating performance will remain weak and free cash flow will remain strained in the next 12 months as the company faces volume declines, inflationary headwinds and supply chain challenges.”
Moody's did note that Alltech's science based proprietary technology allows the company to provide "unique sustainable feed solutions" for farmers. "The company does not sell antibiotic medicated specialty feed ingredients and is one of the largest non-pharmaceutical animal health companies in the world. As such, current societal trends of improved animal welfare and reduced environmental impact are a strong tailwind. Offsetting this tailwind is the company's susceptibility to end market farmer conditions,” found the ratings agency.
In a statement emailed to FeedNavigator today, the company, which specializes in animal health and nutrition, among other business activities, reacted to the outlook.
First off, Alltech said the rating reflects the global macroeconomic challenges of the past year, including the continued effects of the global pandemic, supply chain disruption, inflation, and the war in Ukraine.
“Geopolitical tension and economic instability inevitably impact our industry and our customers, but, as a private and family-owned business, we are focused on building success for the long term. We believe the current challenges underscore the importance of being a trusted partner and solutions provider. In a context of rising raw material prices and volatility in supply, our nutritional technologies and services support agriculture producers in being able to maximize their investment in animal feed or crop inputs.
“As we look to 2023 and much further into the future, we have every reason to be confident.”
Agility
As a private and global family business, Alltech also said it has the ability to remain agile in a tumultuous economy and focus on the long-term success of its customers.
“Our local teams work alongside our customers in more than 120 countries, meeting local challenges with global expertise. Their efforts are bolstered by a strategic global manufacturing footprint that enables Alltech to better manage supply chain challenges. This week, in fact, we opened our eighth manufacturing facility for organic minerals in Vietnam, one of more than 80 manufacturing facilities globally.”
On the ESG front, Moody’s said Alltech's credit impact score reflected highly negative exposure to environmental and governance risks, along with moderately negative exposure to social risk.
To counterbalance that assessment, Alltech noted that “currently, many ESG evaluations by credit rating agencies are industry- rather than company based, which emphasizes the importance of our work to forge deeper and more purposeful collaborations with customers and supply chain partners for the continual advancement of sustainability in food production.”
The company said it has recently appointed its first vice president of ESG, Tara McCarthy, formerly the CEO of Bord Bia, as an expression of its dedication to advancing sustainability within its business and supply chain.
It also highlighted its intention to commit to the Science Based Targets initiative (SBTi). “Within this framework, we will reduce our greenhouse gas emissions by 46% and those of our value chain by 28% by 2030.”
