Research Update: Minerals Producer Imerys S.A. Downgraded To 'BBB-' From 'BBB' On Recurring Metrics Pressure; Off Watch; Outlook Stable

The market environment in late 2019 and early 2020 has weighed on Imerys S.A.'s funds from operations (FFO) to debt, resulting in a recurring shortfall versus the 30% level we view as commensurate with the rating. This follows significant nonrecurring elements related to business realignments in 2018, modestly higher than expected restructuring charges in 2019, and operational issues reflected in the previous CEO's unexpected departure in October 2019. Despite the group's conservative financial policies, its main shareholder GBL electing for a scrip dividend in 2020, and arrival of new CEO Alessandro Dazza, operating environment might not support sustainable recovery in FFO to debt to 30%. We are therefore lowering our long-term issuer credit and senior unsecured debt ratings on Imerys

...- The market environment in late 2019 and early 2020 has weighed on Imerys S.A.'s funds from operations (FFO) to debt, resulting in a recurring shortfall versus the 30% level we view as commensurate with the rating. - This follows significant nonrecurring elements related to business realignments in 2018, modestly higher than expected restructuring charges in 2019, and operational issues reflected in the previous CEO's unexpected departure in October 2019. - Despite the group's conservative financial policies, its main shareholder GBL electing for a scrip dividend in 2020, and arrival of new CEO Alessandro Dazza, operating environment might not support sustainable recovery in FFO to debt to 30%. - We are therefore lowering our long-term issuer credit and senior unsecured debt ratings on Imerys to '###-' from '###' and removing the ratings from CreditWatch, where we placed them with negative implications on Nov. 5, 2019. - The stable outlook reflects our view that FFO to debt should remain...

Research Update