Fitch cuts Arcelik to BB+

Fitch Ratings said it downgraded Arcelik AS's local-currency issuer default rating to BB+ from BBB- and national long-term rating to AA+(tur) from AAA(tur). The Rating Watch negative status was removed. Arcelik's BB foreign-currency issuer default rating with stable outlook was affirmed.

The negative watch began in October 2006 following Arcelik's decision to increase its stake in Beko Elektronik.

The downgrade reflects the subsequent deterioration of Arcelik's business and financial profile following the Beko acquisition, Fitch said. The company also reported negative operating cash flows for fiscal year 2006. Arcelik now faces the challenge of turning around Beko, especially considering the very competitive nature of the TV manufacturing business, the agency said.

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