Moody's upgrades Pfleiderer Group's CFR to Ba3

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Moody's/Fordaq
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The rating agency Moody's upgraded Pfleiderer Group's corporate family rating (CFR) from "B1" to "Ba3". The outlook on Pfleiderer Group S.A. has been changed to stable from positive, says Moody's in its press-release. 

The upgrade of Pfleiderer's CFR to Ba3 primarily reflects the group's sound EBITDA improvement during 2016, which was better than Moody's had anticipated and profitability and leverage metrics which now meet the agency's guidance for a Ba3 rating.

Reported EBITDA before non-sustainable items increased to EUR149 million in 2016 from EUR132 million in the prior year (+12.5%), while margins widened by 2.1%-points to 15.5%.

Despite group revenue of EUR960 million falling by 2.4% year-over-year (yoy) due to price pressure and negative currency effects especially in Poland, healthy earnings growth was mainly fuelled by lower raw material costs and operational improvement measures.

Moody's expects Pfleiderer's operating performance to develop favourably over the next two years, based on supportive economic indicators in its core regions Germany and Poland as well as forecast moderate expansion in residential new build activity and furniture demand growth, particularly in Germany. Combined with initiated capacity additions and an ongoing shift towards value-added products, Moody's projects Pfleiderer's revenues to increase at mid-single-digits per annum and EBITDA margins to continue to strengthen towards 16% by year-end 2018, assuming no material adverse currency effects and/or further intensifying price pressures.

The stable outlook assumes that Pfleiderer will return to organic topline growth in 2017 and continue its recent track record of steady profit expansion. This should be supported by demand growth in the group's core western and eastern European markets as well as further synergies associated with "One Pfleiderer" and enable de-levering to below 3x debt/EBITDA over the next two years.

Full report is available at Moody's official page. 

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