Karachi: VIS Credit Rating Company Limited has reaffirmed the stable entity ratings of ‘A/A-1’ for Premier Sales (Private) Limited, reflecting its solid market position as one of Pakistan’s leading distribution companies and its robust short-term financial health.

According to VIS Credit Rating Company Limited, the ratings reflect Premier Sales’ status as the second-largest distributor in Pakistan, serving a broad range of local and international clients in the pharmaceutical, FMCG, and allied sectors, with pharmaceuticals being the primary focus. The company’s ability to maintain good credit quality is supported by adequate protection factors, although these could vary with economic changes. The stable outlook follows the last assessment on August 10, 2023.

Recent developments for Premier Sales include the acquisition of new principals and customers and the expansion of existing relationships, which have contributed to revenue growth and demand stability. However, the company’s profitability has been affected by rising operating costs and increasing financial charges. Financial risks are also noted due to the need for larger inventories to support growth, leading to higher working capital requirements and increased borrowing for new warehousing facilities. This has significantly raised the company’s gearing and debt leverage, weakening debt coverages. Despite these challenges, sponsor support is anticipated to continue, providing crucial working capital assistance.

The future ratings outlook for Premier Sales will depend on its ability to manage pricing revisions and introduce new business streams with better margins amid challenging economic conditions, alongside maintaining strong sponsor support and improved capitalization indicators.