Fitch affirms Rexel

Fitch Ratings said it affirmed Rexel SA's long-term issuer default rating and senior unsecured rating at BB and short-term rating at B.

The outlook is stable.

Fitch said the affirmation and stable outlook are based on the positive effect of management refocusing on core geographies, market segments and organic sales growth, rather than mainly on acquisition, over the next three years.

“In 2017, Rexel improved EBITDA margins thanks to some operational leverage and improving markets, and these are poised to reach 5.5% by FY19,” the agency said in a news release.

“Combined with tight cost control, this should allow free cash flow (FCF) generation to rise and stabilize at 1.2%-1.6% of sales over the rating horizon. This should result in funds from operations (FFO) adjusted net leverage falling below 5.0x by end of 2019/early 2020.”

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