S&P drops Oriflame view to negative

S&P said it changed its outlook for Oriflame Investment Holding plc to negative from stable and affirmed the B ratings on the issuer and its senior secured notes due 2026. The 3 recovery rating (50%) on the notes is unchanged.

“Weak first-half 2022 results mean that Oriflame's operating performance and credit metrics are well below our previous base case. In first-half 2022, Oriflame reported a 15% drop in revenue and a 55% drop in company-adjusted EBITDA. On a 12-months-trailing basis, S&P Global Ratings-adjusted EBITDA declined to €115 million (versus €170 million a year ago) while FOCF turned negative at €33 million (versus positive €58 million a year ago). Credit metrics weakened, with adjusted debt leverage rising to 6.6x versus 4.1x a year ago,” the agency said in a press release.

S&P said its revised forecast projects adjusted debt leverage climbing to about 8.5x in 2022 (versus 6x previously), with EBITDA interest coverage of about 2.3x-2.5x (versus 2.9x previously). “This notably incorporates the shareholder's decision to forgo the 2022 dividend to support the company's financial position.”

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