OREANDA-NEWS. National Rating Agency has raised its national scale credit rating on Pharmacy Chain 36.6 PJSC (Chain 36.6) to 'AA-'. Earlier the company was assigned a positive rating outlook.

The rating upgrade is based on Chain 36.6's strong performance in 2014, reflecting, firstly, the synergy benefits from its merger with theA.v.e chain, which was part of a financial stabilization and operational efficiency improvement strategy, secondly, its strengthened market position: after the first quarter of 2015, the merged group became Russia's leading pharmacy chain in terms of market share (according to RNC Pharma).

The more than one notch rating upgrade reflects the fact that NRA views the company's 2014 results as interim, expecting the merged group to maintain its growth pace and improve its financial profile, especially as A.v.e Group operating companies are not consolidated in the IFRS financial statement dated Dec. 31, 2015, while the results of Oriola-KD Corporation's Russia-based operating companies had been consolidated for less than a month-long period. It is therefore our opinion that the 2014 results hardly reflect the integration benefits for the group's day-to-day operations, particularly for its financial and operating performance.

The rating is constrained by Chain 36.6's retained losses, recorded again at year-end 2014, and its high debt burden, weighing on financial performance at the group level.