S&P lowers Auchan Holding

S&P said it lowered to BBB from BBB+ its long-term issuer credit ratings on Auchan Holding and affirmed the A-2 short-term issuer credit rating.

In addition, the agency lowered the rating on Auchan's senior unsecured debt to BBB from BBB+, in line with the issuer credit rating.

S&P said the downgrade primarily reflects the substantial EBITDA margin contraction that Auchan experienced in its key French, Russian and Italian markets in 2017.

This resulted in its S&P-adjusted EBITDA margin dropping by 70 basis points year-on-year to 5% in 2017, with the adjusted EBITDA declining by 11% in 2017 to €2.27 billion, the agency explained.

“The weaker earnings, alongside capital expenditures (capex) of about €1.7 billion and higher dividend payments, resulted in an increase in adjusted debt by nearly €0.5 billion to €6.3 billion,” S&P said in a news release.

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