Iceland - comment

Yesterday’s Sunday Times carries a negative article on Iceland referring to Coface, a credit insurer who no longer provides credit insurance to suppliers who supply Iceland. In addition to Coface, the article refers to Allianz Trade and Atradius both reducing coverage levels on Iceland last year. Iceland’s payables are c.£600m and any change in payable days etc would have a detrimental impact on Iceland’s own liquidity. However, we are skeptical of any real credit impact of this with no noticeable changes in payables or payable days for Iceland through September 2022 and given it is now Feb 2023, the company would be. The article also refers to the impact of the surge in energy prices on Iceland’s earnings but this is a rehash of information previously disclosed by the Company.
It is difficult to quantify how many of Iceland’s suppliers use credit insurance, and what impact the loss of Coface will have on Iceland’s payables. But at the Q2 numbers, Iceland had outlined some initiatives in its working capital, which would yield a substantial benefit by year-end (March).
The article feels like a planted story by market participants who are short Iceland. Iceland are due to report their Q3 numbers (up to end of December) on Wednesday.