Research Update: Minerals Producer Imerys 'BBB' Ratings Put On CreditWatch Negative On Recurring Pressure On Metrics

France-based minerals solutions producer Imerys revised its 2019 guidance downward for a second time this year, mirroring the manufacturing sector's weakness year-to-date and possibly going forward. CEO Conrad Keijzer unexpectedly resigned after 18 months in office. We now forecast an adjusted funds from operations (FFO) to debt of about 25% in 2019, compared with the rating commensurate level at about 30%. This follows adjusted FFO to debt of only 23% in 2018, mostly linked to exceptional items. We are therefore placing our 'BBB' rating on Imerys on CreditWatch with negative implications, reflecting that we could downgrade Imerys to 'BBB-' in the next three to six months, unless we foresee recovery in the market and the group's performance, alongside management's actions

...- France-based minerals solutions producer Imerys revised its 2019 guidance downward for a second time this year, mirroring the manufacturing sector's weakness year-to-date and possibly going forward. - CEO Conrad Keijzer unexpectedly resigned after 18 months in office. - We now forecast an adjusted funds from operations (FFO) to debt of about 25% in 2019, compared with the rating commensurate level at about 30%. This follows adjusted FFO to debt of only 23% in 2018, mostly linked to exceptional items. - We are therefore placing our '###' rating on Imerys on CreditWatch with negative implications, reflecting that we could downgrade Imerys to '###-' in the next three to six months, unless we foresee recovery in the market and the group's performance, alongside management's actions aimed at restoring credit metrics to levels in line with the '###' rating within that timeframe....

Research Update