Moody’s snips Outokumpu, view to stable

Moody’s Investors Service said it downgraded to B2 from B1 the corporate family rating and to B2-PD from B1-PD the probability of default rating of Outokumpu Oyj. Moody’s also downgraded from Ba3 to B1 the instrument rating on the group’s senior secured notes.

“The downgrade was prompted by Outokumpu’s continued weak results during the last 12 months (LTM) ended 30 September 2019, underpinned by a further deteriorating market environment in the European stainless steel industry, caused by cyclical and structural challenges. The slowdown in end-market demand, unabated high stainless steel imports into Europe suppressing domestic base prices and timing and hedging losses led to an erosion in profitability and cash flow generation,” said Moody’s in a press release.

The agency changed the outlook to stable from negative on Moody’s expectations the tough market will improve next year. “This should ease the pressure on Outokumpu’s profitability, which it would need to structurally improve to more adequately position the B2 rating over the next 12-18 months,” Moody’s said.

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