Research Update: Keter Group B.V. Downgraded To 'B-' On Weakening Profitability And Credit Metrics; Outlook Stable

Household product manufacturer Keter's profitability in 2018 was significantly lower than in our previous base case, with an S&P Global Ratings adjusted EBITDA margin dropping to about 10.5%, from 13% in 2017. We think a strong rebound in Keter's EBITDA base and free operating cash flow generation is unlikely in 2019, considering the tough competitive and retail environment in its main markets. We are lowering to 'B-' our long-term issuer credit and issue ratings on Keter. The stable outlook reflects our view that the group's turnaround plan will allow a gradual improvement of profitability in the next 12 to 18 months, and that it will be able to face its short-term liquidity needs. The downgrade follows Keter's weaker-than-anticipated operating results

...+ Household product manufacturer Keter's profitability in 2018 was significantly lower than in our previous base case, with an S&P Global Ratings adjusted EBITDA margin dropping to about 10.5%, from 13% in 2017. + We think a strong rebound in Keter's EBITDA base and free operating cash flow generation is unlikely in 2019, considering the tough competitive and retail environment in its main markets. + We are lowering to 'B-' our long-term issuer credit and issue ratings on Keter. + The stable outlook reflects our view that the group's turnaround plan will allow a gradual improvement of profitability in the next 12 to 18 months, and that it will be able to face its short-term liquidity needs....

Research Update