Moody's affirms Leggett & Platt

Moody's Investors Service said it affirmed Leggett & Platt's ratings, but revised the outlook to negative due to concerns that the company is increasing its financial leverage even as economic and market conditions remain challenging, especially in housing related products.

"The negative outlook reflects Moody's concern that the weakness in consumer spending, especially for residential housing related products, which comprise about half of the company's revenue and earnings, will be more severe and last longer than initially expected and may prolong the expected benefits from Leggett's strategic realignment," said Kevin Cassidy, vice president/senior credit officer at Moody's.

According to the agency, Leggett recently announced that it was re-aligning its portfolio to concentrate on businesses with a competitive advantage and financial health, change its primary strategic objective from sales growth to total shareholder return, whereby it would dispose of businesses that are not generating returns in excess of the company's cost of capital, reduce its capital/acquisition spending, increase its annual dividend and use its excess cash flow to repurchase shares.

Affected ratings include the company's senior unsecured rating at A2, senior unsecured MTN rating at A2, senior unsecured shelf at provisional A2, subordinated shelf at provisional A3, preferred shelf at provisional Baa1 and commercial paper at P-1.

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