S&P downgrades Epcos

Standard & Poor's said it lowered its long-term corporate credit rating on Epcos AG to BB+ from BBB- and Epcos Finance BV's convertible senior unsecured debt to BB+ from BBB-. All ratings were removed from CreditWatch negative, where they were placed on Nov. 18.

The outlook is stable.

At Dec. 31, Epcos' consolidated debt stood at €339 million. In the 12 months ended Dec. 31, the company had consolidated sales and EBITDA of €1.2 billion and €178 million, respectively.

The downgrade follows a review of the company's operating performance - which has been weaker than expected over recent quarters - and its prospects. Despite its good positioning on value-added and customer-specific applications, Epcos' performance remains affected by very difficult industry conditions, including ongoing overcapacity and fragmentation in the capacitors segment, the agency said.

At Dec. 31, Epcos' lease- and pension-adjusted gross debt represented 2.7x ongoing EBITDA, in line with the rating. S&P said the ratio could improve during 2006, as rising demand for Epcos' products should enable profitability to pick-up.

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