Fitch Assigns 'BBB(idn)' Rating to Berlina

Fitch Ratings-Jakarta/Singapore-4th September 2009: Fitch Ratings today has assigned PT. Berlina Tbk (Berlina) a national long-term rating and the outlook is stable.  Fitch also has assigned  the BBB (idn) rating to Berlina's Series B Rupiah Bonds and  the Islamic Rupiah Bond totalling Rp 117 bio due on 15th December 2009.

The rating reflects Berlina's long-time experience in plastic packaging industry in Indonesia and the improvement of the company's credit metrics in the last two years. Along with the increasing demand of  consumer goods companies in Indonesia and China, Berlina has succeeded to grow above 20% in year 2007 and 2008.   Berlina's financial leverage, as measured by adjusted net debt to EBITDAR has improved  to 1.4x in year 2008 from  3.0x in year 2006 and the EBITDA/Gross Interest has increased to 3.8x in year 2008 from the lowest at 1.9x in year 2006.

The rating is also supported by good liquidity as reflected by the Company's ability to redeem its Rupiah  Bonds due on December 2009 with its cash position Rp 65.5 bio at the end of June 2009 and a commitment to long-term loan facility of Rp 117 bio from PT Bank CIMB Niaga Tbk. Fitch notes that while Berlina's interest coverage ratio may decrease in the short term due to higher interest expenses but it will still be able to support its rating category.

Nonetheless, the rating is limited by the Berlina's small operation scale with total EBITDA Rp 71 bio in 2008, and as well as the nature of the packaging industry that requires continous capital expenditure to increase the sales volume as  stated in the Company's Capital Expenditure Planning of Rp 228 bio for year 2009-2013.  In Fitch's opinion, the capital expenditure plan could weaken the Company's credit metrics in the short to medium term.  However, Fitch considers that part of the capital expenditure planning could be postponed if necessary.

The rating is also limited by sales concentration risk to  Unilever Indonesia (54%) and Unilever China (14%) of all total Company's consolidated revenue in first semester 2009. Although Berlina does not have long-term agreement with Unilever, nonetheless the risk is mitigated by long-term relationship between those two companies since 1970.  Furthermore, the risk of the fluctuating raw material will always have effects on the Company's cashflow.

Stabil outlook reflects the Fitch's expectation that Berlina could maintain its operational performance to support its credit profile with an adjusted net debt to EBITDAR leverage ratio below 2x.  However, a negative rating action may be taken if the Company's financial profile deteriorates to a point that adjusted net debt to EBITDAR ratio exceeds 2x, and/or the EBITDA/gross interest expense falls below 3x continously.  Due to the Company's small operation scale, a  positive rating action is not envisaged in the next two year.

Established in 1969, Berlina engages in plastic packaging and tooth brush manufacturing with the main focus the serve industries of cosmetics, pharmaceutical, consumer goods and food/beverages, etc. In first semester 2009, Berlina has marked the revenue of Rp 245.7 bio and EBITDA of Rp 38.2 bio.