S&P turns Claranet view to negative

S&P said it revised its outlook for Claranet International Ltd. to negative from stable and affirmed its B ratings.

“We expect Claranet's profitability will remain under pressure in fiscals 2023 and 2024. Based on preliminary results for fiscal 2022, Claranet reported weaker-than-expected preliminary profitability and cash flows for fiscal 2022. This reflected slower-than-expected security and cloud business in France and the U.K. as well as margins being compressed by an unfavorable sales mix, continued supply chain issues, and rising costs due to inflation,” S&P said in a press release.

The agency said it forecasts Claranet’s fiscal year 2023 EBITDA margin will stay almost flat between 13%-14%.

“The negative outlook reflects the risk that Claranet could generate negative post-lease FOCF in fiscal 2023 and beyond if inflation and supply chain issues persist and growth in cloud services and cyber security is slower on macroeconomic headwinds,” S&P said.

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