Fitch downgrades Zoomlion

Fitch Ratings said it downgraded Zoomlion Heavy Industry Science and Technology Co. Ltd.'s (Zoomlion) long-term issuer default rating to B+ from BB.

Fitch also said it downgraded the company's senior unsecured rating and the ratings of the bonds issued by Zoomlion H.K. SPV Co. Ltd. to B+ from BB- with a recovery rating of RR4.

All of the ratings also were placed on Rating Watch negative.

The downgrades reflect Zoomlion's significantly worsened financial profile in 2015, with no apparent recovery in 2016, Fitch said.

The company's revenue fell by 24% in the first nine months of 2015 after a 33% decline in 2014, the agency said.

Its working capital needs also have not declined despite the sales decline, Fitch added.

Demand for the company's core concrete machinery products is undergoing a structural decline rather than a cyclical downturn, the agency said.

The company’s effort to diversify its product offering via acquisitions further burdens its balance sheet, Fitch said.

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