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Asda has welcomed Moody’s upgrade of the company’s corporate rating to B1 from B2, following a strong financial performance in FY23.It comes as full-year profits soared by 24% to £1.078bn, largely driven by a like-for-like sales growth of 5.4%, and the impact of strategic acquisitions.
Moody’s attributed the upgrade to the “solid” performance, particularly the reduction in leverage and growth in Asda’s underlying free cashflow, which rose by 31% year-on-year to £776m.
This improved cashflow generation contributed to Asda reducing its total leverage to a multiple of adjusted EBITDA after rent to 3.0x from 3.9x.
Moody’s also said the upgrade took into account the positive impact refinancing would have on Asda’s future leverage.
Michael Gleeson, Asda’s CFO, said: “We welcome Moody’s upgrade which acknowledges the strong performance of the business in FY23. This was underpinned by a solid capital structure that enabled us to deliver value for customers throughout the year and provided us with the confidence to boost growth through strategic acquisitions.
“We remain focused on doing the right thing for customers, colleagues and local communities – and are putting in place the strategic building blocks to set up Asda for long-term success.”
