Research Update: Industrial Service Provider Bilfinger SE Downgraded To 'BB-' On Oil Price Decline, COVID-19 Impact; Outlook Stable

Leading European industrial service provider Bilfinger SE's (about €4.3 billion in revenues and about €140 million reported EBITDA in 2019) operating performance will be hindered by the COVID-19 pandemic and lower oil and gas prices. We expect delays in project executions due to site access restrictions and closed boarders limiting flexible sourcing of staff, lower utilization of frame contracts, as well as material decline in revenues in its oil and gas service operations over the next 12 months. As a result, Bilfinger's EBITDA generation will decline by about 50% and EBITDA margin will only reach 1.5% to 2% and FOCF generation will be negative in 2020, translating into weaker credit metrics than expected. We are therefore lowering our issuer and

...- Leading European industrial service provider Bilfinger SE's (about 4.3 billion in revenues and about 140 million reported EBITDA in 2019) operating performance will be hindered by the COVID-19 pandemic and lower oil and gas prices. - We expect delays in project executions due to site access restrictions and closed boarders limiting flexible sourcing of staff, lower utilization of frame contracts, as well as material decline in revenues in its oil and gas service operations over the next 12 months. - As a result, Bilfinger's EBITDA generation will decline by about 50% and EBITDA margin will only reach 1.5% to 2% and FOCF generation will be negative in 2020, translating into weaker credit metrics than expected. - We are therefore lowering our issuer and issue ratings on Bilfinger SE to '##-' from '##'. The recovery rating remains unchanged at '3' (rounded estimate of 65% recovery). - We base the stable outlook on our expectation that Bilfinger's operating performance will start to normalize...

Research Update