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Rating action

Scope Ratings GmbH (Scope) has today affirmed the A-/Stable issuer rating on Norwegian dairy company Tine SA (Tine). Concurrently, Scope has affirmed the A- rating on senior unsecured debt and the short-term debt rating at S-1.

The full list of rating actions and rated entities is at the end of this rating action release.

Key rating drivers

Business risk profile: BBB (unchanged). Tine’s business risk profile continues to be supported by its exposure to non-discretionary consumer products, primarily dairy, and its solid domestic market shares and brands. The company’s activities in Norway are underpinned by the regulations supporting the dairy industry, which include import tariffs. The main credit constraints include the low country diversification outside Norway and the moderate profitability versus the broader consumer products industry.

In 2024, Tine accounted for 57.9% of volumes and 56.0% of value in the Norwegian grocery store market for dairy products, the largest market segment, and remains the largest processor of domestic milk production. Although the share of domestic revenues has gradually declined, it remains above 80% and was 81% in 2024.

Tine’s profitability, while moderate, has been relatively stable. Scope expects the company’s EBITDA margin* to remain at around 12% over the next few years, which is within the precedent corridor of 11%-13% over 2018-2024.

Financial risk profile: A+ (unchanged). Tine’s financial risk profile continues to support the issuer rating with strong credit metrics and ample financial headroom.

Leverage as measured by debt/EBITDA fell to 0.6x in December 2024, from 0.9x in December 2023 and 1.4x in December 2022. Simultaneously, funds from operations/debt increased to 143% in 2024, from 66%-97% over 2023-2024. The stronger leverage has been driven by improved EBITDA and sufficient cash flow generation to fundamentally reduce debt amid no major expansionary investments. Specifically, debt reduced to NOK 2.3bn in December 2024, from NOK 2.9bn in December 2023 and NOK 3.9bn in December 2022.

For 2025-2027, Scope expects debt/EBITDA to remain within 0.5x-1.0x and funds from operations/debt at above 100%, based on its expectation of relatively stable operating results with annual EBITDA of NOK 3.4bn-3.7bn and despite higher assumed investments under Tine’s new strategy (IMPACT 2030). Scope also expects EBITDA/interest coverage to remain well above 10x.

Cash flow cover as measured by free operating cash flow (FOCF)/debt is very strong, at 26%-85% in 2022-2024 and expected at around 55% in 2025-2027. FOCF remained stable in 2024 at NOK 1.9bn, the same level as in 2023, with continued low capex in a historical context. Scope expects increased capex to reduce FOCF in 2025-2027 to between NOK 1.3bn and 1.6bn.

Tine’s financial policy target to keep leverage (net interest-bearing debt/EBITDA based on the company’s definition) below 2x still constrains further upside to the financial risk profile. This reflects the risk that Tine could use available leverage headroom for discretionary spending, such as larger-than-anticipated investments. This already happened in 2018-2019, which caused credit metrics to weaken suddenly.

Liquidity: adequate (unchanged). The assessment of adequate liquidity is based on the liquidity ratios of above 200% expected over the next few years. Available cash at end-2024 comprised NOK 1.4bn of cash and cash equivalents, NOK 0.8bn of undrawn committed credit lines, and expected positive FOCF. This will be more than enough to cover debt maturities of NOK 0.4bn in 2025, NOK 1.0bn in 2026 and NOK 0.1bn in 2027.

Tine’s equity ratio was 51.2% on 30 April 2025, and Scope expects that the financial covenant of minimum 40% will remain satisfied.

Supplementary rating drivers: Credit-neutral (unchanged). The rating does not incorporate any adjustments related to financial policy, peer group considerations, parent support or governance and structure.

Outlook and rating sensitivities

The Stable Outlook reflects Scope's expectation that Tine will maintain its leading domestic market presence in dairy. It also assumes that credit metrics will remain conservative despite the higher expected capex in the next few years, supported by the current financial headroom, no adverse changes to agricultural regulations, and a relatively resilient earnings profile with exposure to low cyclicality products.

The upside scenarios for the ratings and Outlook are (individually):

1. Introduction of more conservative financial targets in tandem with a move towards a net cash position.
    
2. Improved business risk profile via more diversification and/or stronger profitability.

The downside scenarios for the ratings and Outlook are (individually):

1. Weaker financial risk profile, exemplified by debt/EBITDA sustained at around 2.0x or above.
    
2. Material loss of domestic market shares and/or falling profitability.

Debt ratings

Senior unsecured debt rating remains rated in line with the issuer rating at A-.

The S-1 short-term debt rating is based on the A-/Stable issuer rating, supported by better-than-adequate short-term debt coverage and access to bank and capital markets financing.

Environmental, social and governance (ESG) factors

Overall, ESG factors have no material impact on this credit rating action.

All rating actions and rated entities

Tine SA

Issuer rating: A-/Stable, affirmation

Short-term debt rating: S-1, affirmation

Senior unsecured debt rating: A-, affirmation

*All credit metrics refer to Scope-adjusted figures.

Stress testing & cash flow analysis
No stress testing was performed. Scope Ratings performed its standard cash flow forecasting for the company.

Methodology
The methodologies used for these Credit Ratings and/or Outlook, (Consumer Products Rating Methodology, 31 October 2024; General Corporate Rating Methodology, 14 February 2025), are available on https://scoperatings.com/governance-and-policies/rating-governance/methodologies.
Information on the meaning of each Credit Rating category, including definitions of default, recoveries, Outlooks and Under Review, can be viewed in ‘Rating Definitions – Credit Ratings, Ancillary and Other Services’, published on https://www.scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Historical default rates of the entities rated by Scope Ratings can be viewed in the Credit Rating performance report at https://scoperatings.com/governance-and-policies/regulatory/eu-regulation. Also refer to the central platform (CEREP) of the European Securities and Markets Authority (ESMA): http://cerep.esma.europa.eu/cerep-web/statistics/defaults.xhtml. A comprehensive clarification of Scope Ratings’ definitions of default and Credit Rating notations can be found at https://www.scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Guidance and information on how environmental, social or governance factors (ESG factors) are incorporated into the Credit Rating can be found in the respective sections of the methodologies or guidance documents provided on https://scoperatings.com/governance-and-policies/rating-governance/methodologies.
The Outlook indicates the most likely direction of the Credit Ratings if the Credit Ratings were to change within the next 12 to 18 months.

Solicitation, key sources and quality of information
The Rated Entity and/or its Related Third Parties participated in the Credit Rating process.
The following substantially material sources of information were used to prepare the Credit Ratings: public domain, the Rated Entity and Scope Ratings' internal sources.
Scope Ratings considers the quality of information available to Scope Ratings on the Rated Entity or instrument to be satisfactory. The information and data supporting these Credit Ratings originate from sources Scope Ratings considers to be reliable and accurate. Scope Ratings does not, however, independently verify the reliability and accuracy of the information and data.
Prior to the issuance of the Credit Rating action, the Rated Entity was given the opportunity to review the Credit Ratings and/or Outlook and the principal grounds on which the Credit Ratings and/or Outlook are based. Following that review, the Credit Ratings and/or Outlook were not amended before being issued.

Regulatory disclosures
These Credit Ratings and/or Outlook are issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0. The Credit Ratings and/or Outlook are UK-endorsed.
Lead analyst: Per Haakestad, Specialist
Person responsible for approval of the Credit Ratings: Thomas Faeh, Executive Director
The Credit Ratings/Outlook were first released by Scope Ratings on 16 June 2022. The Credit Ratings/Outlook were last updated on 19 June 2024.

Potential conflicts
See www.scoperatings.com under Governance & Policies/Regulatory for a list of potential conflicts of interest disclosures related to the issuance of Credit Ratings, as well as a list of Ancillary Services and certain non-Credit Rating Agency services provided to Rated Entities and/or Related Third Parties.

Conditions of use/exclusion of liability
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