The credit rating of Abrau-Durso PJSC (hereinafter, Abrau-Durso or the Company) reflects the strong market position of the Company, which is the leader of the Russian sparkling wine market, as well as the Company’s strong operational risk profile assessment, very high profitability, low leverage, and very strong liquidity. The rating is constrained by the medium assessment of debt service and free cash flow.
Abrau-Durso is a Russian company that specializes in the production of sparkling wines. It has three production assets in the Krasnodar Krai (Abrau-Durso Russian Wine House, Loza Winery, Yubileinaya Winery), and two production assets in the Rostov Region (Millerovsky Winery and Vedernikov Winery). Abrau-Durso produces sparkling wines using the classic champagne technology and the Charmat method, as well as still wines, hard cider, liquor, carbonated soft drinks, and artesian water. In addition, Abrau-Durso is developing its own tourism, restaurant and hotel business.
KEY ASSESSMENT FACTORS
In 2024, the Company’s revenues increased by approximately 40% compared to the metric for the year before. This was driven by growth of the total volume of sales by 18% to 66.9 mln bottles, as well as positive pricing trends due to a shift in demand in favor of domestic products following the rise in prices for imported wines after the increase in duties. The Agency also notes that the profitability of Abrau-Durso has increased, which was positively influenced by the increase in the excise tax rate on still and sparkling wines from May 1, 2024 with the provision of a deduction for Russian producers. The FFO margin before interest and taxes in 2024 was 25% (vs. 20% a year earlier).
Strong market position and very high geographic diversification. Abrau-Durso ranks first in the production of sparkling wines in Russia. The Company’s market position is also supported by Russian legislation aimed at developing domestic winemaking. The Company participates in state programs for the support and development of the agriculture industry and winemaking, which allows it to partially compensate for the costs of planting and receive subsidized loans. In 2020, Federal Law No. 468-FZ “On viticulture and winemaking in the Russian Federation” came into force, which limits the use of imported wine material in the production of Russian wines, including sparkling wines. As a result, companies with their own vineyards have gained a competitive advantage in the Russian market for sparkling and still wines. Abrau-Durso has 4,100 hectares of vineyards and 6,800 hectares of vineyard land, as well as its own grape seedling nursery. The Agency notes a very high level of geographic diversification since Abrau-Durso’s products are sold by all the leading federal chains and are present throughout Russia.
Medium business profile assessment. ACRA notes that the favorable demand trends are largely related to government support measures for the wine industry (including an increase in both the duties on imported wines and the excise rate with a deduction for producers of Russian wines), and are also due to the complication of the logistics of wine supplies from abroad. The Agency moderately assesses substitute products, given the strength of the Company’s brand, which is nevertheless limited by the presence of a wide range of competitive products in the market.
Strong corporate governance. The Company has key management bodies, as well as policies and formalized procedures for making management decisions. The Agency positively assesses the development strategy of Abrau-Durso, taking into account the strengthening of vertical integration and the expansion of its product line. Risk management is assessed as high — the Company insures key risks and has formalized standards for various types of risks. The financial transparency of Abrau-Durso is high, and the Company prepares its IFRS financial statements on an annual and semi-annual basis. The complicated structure of the group has a constraining influence on the corporate governance assessment.
Low leverage and medium interest payment coverage. In 2024, the ratio of Abrau-Durso’s total debt to FFO before net interest payments declined to 2.6x vs. 4.5x a year earlier thanks to positive dynamics of the Company’s operating indicators, as well as the additional issue, the proceeds from which were used to partially repay debt obligations. The Agency expects leverage to be below 2.0x by the end of 2025 and in subsequent years. The Company’s loan portfolio includes bank credit lines, credit lines provided under the Support Program of the Ministry of Agriculture of the Russian Federation No. 1528 (interest payments are subsidized by the government), and loans from related parties. In addition, this year the Company successfully placed its debut bond issue. The loan portfolio is well diversified; the peak debt repayment is scheduled for 2026, but in general, the debt repayment schedule is comfortable, and therefore the leverage assessment is determined by the Agency as high. According to ACRA’s calculations, the ratio of FFO before net interest payments to interest payments was 2.8x in 2024 compared to 2.7x a year earlier, which corresponds to a medium debt service assessment. In the future, the Agency expects this indicator to grow due to a projected decline in leverage and market interest rates.
Very high assessment of liquidity and medium assessment of cash flow. Abrau-Durso has a comfortable debt repayment schedule. As of June 30, 2025, the amount of committed credit limits available to the Company was more than RUB 10 bln, which fully covers its debt repayment needs in the coming years. The Company’s free cash flow (FCF) in 2024 was negative due to significant growth of working capital, which was related to an increase in the volume of sales. Nevertheless, the Agency expects the FCF margin to be positive by the end of 2025 and in subsequent years due to growth of the operational cash flow.
KEY ASSUMPTIONS
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Capital expenditures and dividend policy in 2025−2028 in line with the Company’s plans;
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Sales volumes growing in physical terms in line with the Company’s forecast for 2025–2028.
POTENTIAL OUTLOOK OR RATING CHANGE FACTORS
The Stable outlook assumes that the rating will highly likely stay unchanged within the 12 to 18-month horizon.
A positive rating action may be prompted by:
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FCF growth exceeding 10% coupled with the ratio of capital expenditures to revenues falling below 5%;
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Weighted ratio of total debt to FFO before net interest payments declining below 1.0x coupled with the weighted ratio of FFO before net interest payments to interest payments exceeding 5.0x.
A negative rating action may be prompted by:
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Weighted FFO before net interest payments and taxes falling below RUB 5 bln;
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Weighted ratio of FFO before net interest payments to interest payments declining below 2.5x;
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Weighted ratio of total debt to FFO before net interest payments exceeding 3.5x.
RATING COMPONENTS
Standalone creditworthiness assessment (SCA): a+.
Support: none.
ISSUE RATINGS
No outstanding issues have been rated.
REGULATORY DISCLOSURE
The credit rating has been assigned under the national scale for the Russian Federation and is based on the Methodology for Assigning Credit Ratings to Non-Financial Corporations under the National Scale for the Russian Federation and the Key Concepts Used by the Analytical Credit Rating Agency within the Scope of Its Rating Activities.
The credit rating of Abrau-Durso PJSC was published by ACRA for the first time on September 27, 2021. The credit rating and its outlook are expected to be revised within one year following the publication date of this press release.
The credit rating was assigned based on data provided by Abrau-Durso PJSC, information from publicly available sources, and ACRA’s own databases. The rating analysis was performed using the IFRS financial statements of Abrau-Durso PJSC. The credit rating is solicited and Abrau-Durso PJSC participated in its assignment.
In assigning the credit rating, ACRA used only information, the quality and reliability of which were, in ACRA’s opinion, appropriate and sufficient to apply the methodologies.
ACRA provided additional services to Abrau-Durso PJSC. No conflicts of interest were discovered in the course of credit rating assignment.
