Moody's: Perdigao outlook negative

Moody's Investors Service said it affirmed the Ba1 local-currency corporate family rating for Perdigao SA and changed the outlook to negative from stable to reflect lower operating margins and higher-than-expected working capital needs in the first two quarters, resulting in negative cash flow from operations and higher leverage.

The issuer's total debt-to-EBITDA ratio grew to 3.7 times for the 12 months ended the first quarter and 3.8 times for the second quarter.

Perdigao's Ba1 rating is supported by its leading market positions, management quality and corporate governance standards, the agency said.

The rating is mainly constrained by revenue and earnings exposure to commodity price movements, the susceptibility of its sales and cash flow to export market closures or disruptions and the challenges associated with successfully implementing its growth strategy, Moody's said.

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