S&P upgrades Hexcel

Standard & Poor's said it raised the corporate credit rating on Hexcel Corp. to BBB- from BB+ and removed ratings from CreditWatch, where it was placed with positive implications in April.

The outlook is stable.

The upgrade was based on steadily improving profitability over time due to higher volumes, but also improved operating efficiency thanks to the company's efforts to reduce cost and improve productivity, the agency said.

Hexcel's EBITDA margins, which were 21.6% in 2013, compare favorably to the aerospace and defense industry average of 10% to 18% and have improved every year since 2008, S&P said.

Hexcel is expected to continue to generate above-average profitability with a volatility pattern that is in line with or somewhat less than industry peers, the agency said.

These factors are enough to offset potential volatility in profitability stemming from Hexcel's early position in the supply chain, evidenced by historical data from 2007 to 2013, S&P said.

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