Moody's downgrades FKI

Moody's Investors Service said it downgraded FKI plc's corporate family rating and senior unsecured bonds to Ba2 from Ba1 and changed the outlook to negative.

This concludes the review for possible downgrade begun on Dec. 18.

The agency said the downgrade is mainly a result of the company's high leverage - the debt-to-EBITDA ratio was 5.2x for the last 12 months ended in September - against earlier expectations of significant profitability improvements and free cash flow generation in the financial year ending in March, which could have reduced the high leverage levels.

FKI's profitability and free cash flow have continued to decline, its operations have been negatively affected by a reduction in U.S. airports impacting FKI Logistex and the company's hardware and energy technology divisions experienced reduced profits due to a significant market reduction in U.S. housing and high raw material prices, the agency said, although FKI reported increased operating profits at its lifting products division.

The negative outlook reflects Moody's concerns that FKI may be challenged to visibly improve key credit metrics to sustainable levels that are commensurate with a Ba2 rating against the backdrop of volatile input costs and little visibility of improving market conditions in Europe and the United States.

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