Moody's eyes Smiths Group for downgrade

Moody's Investors Service said it placed Smiths Group plc's ratings on review for downgrade.

The review follows Smiths' announcement on Monday that it agreed to sell its medical division. “The review for downgrade reflects the negative impact of the separation on Smiths' business profile and some uncertainty regarding how much of the proceeds are being retained, including for debt reduction,” Moody’s said in a press release.

The agency noted the medical division contributed 26.5% to revenue and 32.5% to company-defined underlying operating profit for fiscal 2020 (July). The company also has yet to decide how much of the proceeds will go to shareholders and how much will be kept in the business, including for debt reduction.

The review will focus on the business profile, performance of the continuing operations of Smiths in the context of pandemic-related pressures and capital structure implications, Moody’s said.

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