Construction Group Salini Impregilo Downgraded To 'BB-' On Weaker Cash Flow Generation; Outlook Negative

Salini Impregilo SpA generated weak operating cash flow in 2018, mainly owing to delayed payments from projects in Ethiopia and fewer projects in Italy. The group's 2018 adjusted financial leverage was consequently significantly worse than we expected, although the sale of the Plants and Paving division garnered €506 million. We now anticipate that funds from operations (FFO) to debt will be significantly below 20% in 2019. We are therefore lowering our long-term rating on Salini Impregilo to 'BB-' from 'BB', and removing it from CreditWatch with negative implications. The negative outlook reflects our view that there is still meaningful downside risk for the rating, given the group's track-record of weak cash flow generation, the short-term financial burden related to the

...+ Salini Impregilo SpA generated weak operating cash flow in 2018, mainly owing to delayed payments from projects in Ethiopia and fewer projects in Italy. + The group's 2018 adjusted financial leverage was consequently significantly worse than we expected, although the sale of the Plants and Paving division garnered 506 million. We now anticipate that funds from operations (FFO) to debt will be significantly below 20% in 2019. + We are therefore lowering our long-term rating on Salini Impregilo to '##-' from '##', and removing it from CreditWatch with negative implications. + The negative outlook reflects our view that there is still meaningful downside risk for the rating, given the group's track-record of weak cash flow generation, the short-term financial burden related to the potential acquisition of Astaldi and the capital structure's increasing refinancing risk. MILAN (S&P Global Ratings) March 21, 2019--S&P Global Ratings today took the rating actions listed above. Salini Impregilo's...

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