S&P moves Iceland Foods view to negative

S&P said it revised its outlook for Iceland Foods Group and its parent Lannis Ltd. to negative.

“Despite sound top-line performance as consumers shift toward value and frozen food ranges, we forecast that Lannis Ltd., the parent entity of food retailer Iceland Foods Group, will see a deterioration in its profitability and cash generation in fiscal 2023 (ending March 24, 2023), owing to escalating volatility and rising energy prices and overall inflation affecting other costs and discretionary spending,” S&P said in a press release.

S&P warned there could be a downgrade over the next 12-18 months if Iceland Foods' earnings before interest, tax, debt, amortization, and rent to cash interest plus rents cover ratio remained at about 1.2x for an extended period, its free operating cash flow after leases turned stubbornly negative, or its liquidity weakened.

The agency also affirmed the B long-term issuer credit rating on the group, the B issue rating on the group's senior secured notes due in March 2025 and May 2028, and the BB issue rating on the super senior secured revolving credit facility.

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