S&P changes Xella view

S&P said it revised the outlook of Xella to negative from stable and affirmed its issuer rating at B+.

“We believe the Covid-19 pandemic and resulting economic recession will lead to weak construction demand, reducing Xella's sales by more than 10% in 2020 compared with average sales of nearly €1.6 billion annually,” the agency said in a news release.

“We expect a 10%-15% decline in EBITDA that could cause our adjusted gross debt-to-EBITDA metric for Xella to deteriorate to 7.0x-7.5x in 2020, or nearly 9.0x including the preferred equity certificates (PECs). However, Xella's high leverage is mitigated by its current high cash holdings, and we project continuously solid free operating cash flow (FOCF) alongside a swift recovery in credit metrics from 2021.”

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