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The benefits of having diverse operating segments has been clearly evidenced over the past 18 months. Logistics remained stable in FY20, when all the industrial businesses came under significant pressure. However, the timber and bedding businesses, along with polymers reported improved results in FY21, whilst logistics came under pressure. This industry diversity, coupled with its leading competitive position in various sectors, and its wide- ranging customer base, across most economic segments, enables the group to withstand pressures in any one segment.
The Stable Outlook reflects GCR’s expectations that the recovery in demand across most business segments will be sustained, resulting in an improvement in KAP’s cash flows and credit protection metrics over the next 12-18 months. Downward rating action could derive should the group’s earnings recovery not continue as expected and/or if liquidity and credit metrics deteriorate as a result of the increased capex budget which could see debt levels increase.