S&P: Kennametal outlook negative

Standard & Poor's said it revised the outlook on Kennametal Inc. to negative from stable and affirmed its BBB long-term corporate credit rating.

"The outlook revision follows Kennametal's weakening operating performance amid a sharper-than-expected contraction in demand and declining profitability, and our concern that the company's credit protection measures are likely to fall meaningfully below our expectations for the rating," S&P analyst Gregoire Buet said in a statement.

Ratings reflect the company's satisfactory business risk profile, underpinned by its leading global positions in cyclical and competitive markets for metalworking tools and industrial components, and an intermediate financial profile characterized by moderate debt levels, the agency said.

This is partly offset by the company's weakening credit measures and nominally modest free cash flow generation for the rating, S&P noted.

The agency said it expects adjusted total debt-to-EBITDA ratio to average about 2.5x.

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