S&P views Ideal Standard negatively

S&P said it revised its outlook for Ideal Standard International SA to negative from stable and affirmed its B- ratings.

“We expect that Ideal Standard will continue to generate negative FOCF in 2022. The company has yet to publish its full year results for 2021, but we expect that its FOCF was -€30 million to -€35 million, in line with our previous forecasts. This is due to higher raw materials prices, costs associated with its restructuring programs (migrating manufacturing to low-cost counties, supply chain and procurement optimization, and other productivity enhancements), and a significant increase in working capital,” S&P said in a press release.

The agency warned that unless Ideal Standard’s FOCF does not turn positive in 2023, it may need to use its revolving lines or obtain new funding sources.

“In that scenario, liquidity may face additional pressure. Positively, the company refinanced its debt last year and does not have debt maturities before 2026,” S&P said.

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