S&P upgrades Sandvik

S&P said it raised its issuer credit rating on Sandvik to A- from BBB+ and affirmed the short-term ratings at A-2 and K-1.

“Sandvik's business portfolio rationalization, cost cutting, and management's commitment to lower debt, coupled with a favorable industry environment, have helped the company achieve funds from operating (FFO) to debt nearing 150% in 2018, compared with about 90% in 2017 and 25% in 2015,” S&P said in a news release.

“We expect the company to be more resilient in the future, despite exposure to cyclical end markets, thanks to a more flexible cost structure.”

The agency said the stable outlook reflects an expectation of strong credit ratios, supported by an EBITDA margin in excess of 18%, even at the bottom of the cycle, and management's commitment to maintain a very conservative balance sheet, with debt to EBITDA expected to be below 1x.

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