Moody's drops IFCO outlook to negative

Moody's Investors Service said it changed IFCO Systems NV's outlook to negative from positive following the company's press release indicating an expected loss in the third quarter of 2006 due to the impact of investigations by the U.S. Immigration and Customs Enforcement Agency.

The agency said the change in outlook reflects uncertainty surrounding the impact of the investigation and the timing of its resolution. Higher-than-expected legal costs have been incurred and productivity in the U.S. pallet management services division declined due to the loss of personnel and the need to find and train new staff. The possible outcome of the investigation or its effect on credit metrics is unclear.

However, Moody's said it views the event as being of a non-recurring nature and management expects the underlying business to continue to perform and produce positive cash flows and higher revenues regardless of the drop in productivity.

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