Moody's downgrades Ontex

Moody's Investors Service said it downgraded Ontex Group NV's corporate family rating to B2 from B1, its probability of default rating to B2-PD from B1-PD, the €580 million senior unsecured notes due 2026 to B2 from B1 and changed the outlook to stable from negative.

"The downgrade reflects our expectation that Ontex's profitability will be strained by continued high input costs resulting in weaker credit metrics for 2022 than previously anticipated," said Pilar Anduiza, Moody's lead analyst for Ontex, in a press release.

"The company expects to offset part of the raw material price inflation with ongoing cost cutting and pricing, but the possibility of higher sustained raw material prices beyond 2022 could limit the extent of profit improvement in 2023 and the difficulties to complete asset sales in the current uncertain environment significantly reduce visibility on Ontex's future operating and financial performance," added Anduiza.

The stable outlook indicates an expectation that Ontex's operating performance will recover over the next 12-18 months, the agency said.

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