Fitch downgrades Amcor

Fitch Ratings said it downgraded Amcor plc’s long-term issuer default rating to BBB from BBB+. The outlook is stable.

“The downgrade reflects slower-than-expected deleveraging following Amcor’s acquisition of Bemis. While we forecast EBITDA margins to improve to around 15%-16% in 2020-2023, higher-than-expected shareholder returns in the form of increasing dividend payments and the ongoing $500 million share buyback constrain the company’s financial profile,” said Fitch in a press release.

Fitch said it forecasts funds from operations net leverage will be above 3x in the medium term, which is commensurate with a lower rating, in the agency’s view. Amcor’s investment-grade profile is supported by the company’s leading position in the flexible and rigid packaging markets, strong geographic diversification and exposure to stable consumer industries.

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