Fitch changes Ocado view to negative

Fitch Ratings said it revised the outlook on Ocado Group plc's long-term issuer default rating to negative from stable and affirmed the issuer default rating at BB-.

The agency said the negative outlook reflects capital requirements to fund the accelerated growth of Ocado's solution business and the execution risk associated with its delivery.

“In our view, the additional capital required from 2020 to fund the upfront costs of this growth will test the group's cash flow strength and financial policies,” Fitch said in a news release.

“Historically, equity contributions have covered these cash flow deficits, and in our view, the funding mix used to support the group's strategic development, coupled with the underlying profitability of the individual technology contracts, will define Ocado's rating trajectory over time.”

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