S&P downgrades Kronos

S&P said it downgraded Kronos Worldwide Inc.’s issuer rating to CCC+ from B and its senior secured notes to B from BB-. The recovery rating remains 1 (rounded estimate: 90%).

“The downgrade reflects our expectation for continued weakness in Kronos' operating performance in 2023. Following Kronos' weak operating results in late 2022 and early 2023, we anticipated performance to improve, however, we now believe this will not occur and results are unlikely to recover in the near term. Furthermore, we expect continued weakness during the second half of 2023 due to ongoing weak global demand and soft volumes in combination with downward pricing pressure in the market,” S&P said in a press release.

The agency noted slack demand for titanium dioxide across all major end markets will continue hurting Kronos.

In fact, S&P said, assuming no large debt-funded acquisitions, it forecasts S&P Global Ratings-adjusted debt to EBITDA of 16x-18x over the next 12 months for Kronos.

The outlook is negative.

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