Research Update: Sandvik AB Downgraded To 'BBB+' On Slower-Than-Expected Deleveraging; Outlook Stable

Swedish mining equipment and cutting tools company Sandvik's deleveraging is slower than what we had envisaged. This is mainly due to softer market conditions as well as temporary one-off restructuring and tax costs that impair the company's EBITDA and cash generation. Under our revised base case, we anticipate that the company's S&P Global Ratings-adjusted funds from operations (FFO) to debt will remain significantly below our 55% downside threshold for the third consecutive year in 2024, at about 36% (or about 45% excluding one-off items) from 43.8% in 2023 and 44% in 2022. We expect FFO to debt will improve only moderately to 50%-55% in 2025. We therefore lowered to 'BBB+' from 'A-' our long-term issuer credit rating on Sandvik and

...- Swedish mining equipment and cutting tools company Sandvik's deleveraging is slower than what we had envisaged. This is mainly due to softer market conditions as well as temporary one-off restructuring and tax costs that impair the company's EBITDA and cash generation. - Under our revised base case, we anticipate that the company's S&P Global Ratings-adjusted funds from operations (FFO) to debt will remain significantly below our 55% downside threshold for the third consecutive year in 2024, at about 36% (or about 45% excluding one-off items) from 43.8% in 2023 and 44% in 2022. We expect FFO to debt will improve only moderately to 50%-55% in 2025. - We therefore lowered to '###+' from 'A-' our long-term issuer credit rating on Sandvik and our issue rating on the company's unsecured debt. At the same time, we affirmed our 'A-2' short-term issuer credit rating and our 'K-1' short-term Nordic scale rating on the company. - The stable outlook reflects our expectation that Sandvik, thanks...

Research Update