S&P lowers Ontex

S&P said it lowered Ontex Group NV and its €580 million senior unsecured notes due 2026 to B+ from BB-.

“We anticipate Ontex's leverage will peak at about 7x in 2021 and remain above 5x in 2022, which is not commensurate with a BB- rating. On Dec. 15, Ontex's management revised down its guidance for revenue growth and EBITDA margins in 2021 by 50 bps. Ontex now expects revenue to decline 1.5% on a constant foreign exchange (FX) basis and reported EBITDA margin (excluding one-off items) to be about 8.5%,” S&P said in a press release.

The agency said it updated its forecasts accordingly and now projects the S&P Global Ratings-adjusted EBITDA margin, including roughly €50 million of cash restructuring costs, to approach 6.5% after 10.2% in 2020, leading to adjusted debt to EBITDA increasing to almost 7x in 2021.

“This is a major deviation compared with our previous estimate of leverage close to 5.5x,” S&P said.

The outlook is negative.

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