Bormioli Pharma SpA

The stable outlook reflects our expectation that Bormioli Pharma will continue to capitalize on its solid client relationships and leading niche positions in its main markets. We expect high expansionary capital expenditure (capex) will result in negative €6 million free operating cash flow (FOCF) in 2020. We expect these investments to become EBITDA accretive from 2021 onward. We forecast S&P Global Ratings-adjusted debt to EBITDA of 6.4x by December 2020. We could lower our rating if Bormioli Pharma experienced unexpected customer losses or operating setbacks due to furnace shutdowns, or raw material price increases that it was not able to pass on to customers. This could undermine the company's liquidity position in the medium term. We could also lower the

...Revenue growth in 2020 will be supported by the acquisition of Remy & Geiser Gmbh (R&G) and volume growth. In 2020, we expect revenues to grow by about 12%, largely due to the full-year contribution of R&G (29 million). We expect stable selling prices (supported by low raw material prices) and modest volume growth in most categories. We anticipate EBITDA margins will benefit from lower exceptional costs in 2020. We expect the company to incur much lower extraordinary costs in 2020. Most of these are related to one-off events, such as the disposal of the tubular glass business; the construction of a new soda-lime furnace in San Vito; as well as restructuring and reorganization initiatives. In 2020, we also expect EBITDA margins to benefit from more energy efficient operations at the recently refurbished furnace in Bergantino. Bormioli Pharma is likely to continue to pursue small bolt-on acquisitions.In 2019, Bormioli Pharma acquired Germany-based R&G. The acquisition allowed Bormioli Pharma...

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