S&P Global Ratings announced on Monday that it has upgraded the long-term issuer credit ratings for Suntory Holdings Ltd. and its U.S. subsidiary, Suntory Global Spirits Inc., raising them from BBB+ to A-. The ratings agency left the outlook at stable.
S&P cited the company's ability to maintain key cash flow metrics at sound levels as a central reason for the upgrade. The agency noted that Suntory's earnings have been steady and that management has pursued a conservative financial policy, supporting the credit-positive view of the group's liquidity and leverage profile.
The ratings rationale highlights a roughly 20% reduction in the company's debt over the past three years, bringing total borrowings to around ¥800 billion as of the end of December 2025. S&P expects adjusted debt-to-EBITDA to remain at approximately 2.0x, a level the agency regards as consistent with the newly assigned A- rating. That ratio is projected to hold even after the company proceeds with the ¥246.5 billion acquisition of Daiichi Sankyo Healthcare Co. Ltd., which Suntory announced in April 2026.
Suntory's business mix is an important element of S&P's assessment. About half of the company's EBITDA is generated by the beverage and food segment, slightly more than 40% comes from alcoholic beverages, and roughly the remaining 10% is derived from other activities, including health foods. The ratings agency also pointed to the group's international footprint: overseas profits now account for over half of companywide profits, and sales in North America, Europe and Asia each contribute in the range of 15% to 20% of net sales.
On near-term earnings, S&P projects a gradual increase in EBITDA to above ¥450 billion per year over the next one to two years, up from ¥415.6 billion in fiscal 2025. The agency expects the company to sustain an EBITDA margin in the neighborhood of 14% to 15%, a result S&P attributes to an improved product mix and stronger cost controls.
While the upgrade reflects an improved leverage and cash flow profile, S&P set out explicit thresholds that could prompt a downgrade. The agency said it could lower the rating if adjusted debt-to-EBITDA moved toward 2.5x as a consequence of weaker profitability or a more aggressive financial policy. Conversely, S&P indicated that another upgrade is unlikely in the foreseeable future, citing ongoing competition in global beverage markets as a limiting factor.
Analytical takeaway - The upgrade recognizes deleveraging and disciplined cash flow management while acknowledging the competitive pressures that may constrain future rating upside. Key performance metrics to watch include adjusted debt-to-EBITDA, EBITDA growth toward the projected ¥450 billion-plus run rate, and maintenance of a 14%-15% EBITDA margin.