S&P: CP Ships view now negative

Standard & Poor's said it affirmed its BBB- long-term corporate credit rating on CP Ships Ltd. The outlook is revised to negative from stable.

S&P said the outlook revision reflects poorer-than-expected operating results for the first half of the year, a somewhat weaker financial profile, and reduced financial flexibility, after the restatements of 2002 and 2003 operating results.

"CP Ships' financial results for 2002 and 2003, as restated, and the results for the first half of 2004 were weaker than had previously been factored into the ratings. Credit measures are weak for the ratings and, despite a generally robust industry environment, the near-term outlook is clouded by increasing cost pressures," said S&P credit analyst Kenton Freitag.

According to S&P, the ratings on CP Ships reflect its solid market position in regional container shipping lanes, its consistent profitability through industry cycles, and good liquidity. These positive factors are offset by the company's participation in a highly cyclical industry and the uncertainty and potentially negative lingering effects of the company's recent profit restatement.

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