Moody's lowers Pearl Holding

Moody's Investors Service said it downgraded Pearl Holding III Ltd.'s corporate family rating and senior secured bond rating to B2 from B1.

Moody's also said it revised the outlook to negative from stable.

The downgrade was prompted by an expectation that Pearl's profitability and financial leverage will remain weak through 2020 because of the weaker sales and earnings contributions in its automotive and consumer electronics segments, Moody's said.

While the company has been implementing cost-cutting measures, whether Pearl can improve profitability meaningfully has yet to be proven because of the uncertain demand prospects from end markets, the agency said.

In 2019, Moody's said it expects the company's annual revenue to decline by 10% to 12% and adjusted EBITDA to decrease by about 25% versus the levels in 2018.

Only a modest recovery is expected in 2020 because of soft demand from its major end markets, the agency said.

These weaknesses are partly mitigated by the company's diversified end markets and long-standing customer relationships, Moody's said.

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