Weener Plastics Group B.V.

The stable outlook reflects our expectation that Weener Plastics will continue to capitalize on its solid client relationships and leading niche market positions. We anticipate a slight revenue decline for 2020 and expect FOCF to be weak, albeit positive. We expect adjusted leverage will improve to about 4.7x by December 2020. We view a downgrade as unlikely over the next 12 months. We could lower the rating if Weener Plastics experienced unexpected customer losses, weakening EBITDA, or negative FOCF. We could also lower the rating if the group's financial policy became more aggressive, especially with regard to shareholder remuneration, preventing any material deleveraging. We could raise the rating if Weener Plastics generated annual FOCF of about €20 million and leverage

...S&P Global Ratings expects revenue to decline in 2020, primarily due to lower selling prices. Weener Plastics Group B.V.'s end-markets are relatively stable. They include personal care, food and pharmaceuticals. Demand for these end-markets has remained relatively resilient, despite the COVID-19 pandemic. For 2020 we expect revenue to decline by 1%-2%. The decline in revenue will mainly reflect unfavorable foreign exchange (FX) movements and lower average selling prices, as lower resin prices are contractually passed on to customers. This will only partly be offset by the contribution of Orange Products Europe (acquired in December 2019) and capacity expansions in the Netherlands and Russia. We expect EBITDA margin to improve on the back of lower exceptional costs. In 2019, S&P Global Ratings-adjusted EBITDA was burdened by high exceptional costs, such as restructuring charges related to the closure of Innovaplast in Mexico and operational improvement activities in Germany. We expect a...

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