S&P turns Rekeep view to negative

S&P said it revised its outlook for Rekeep SpA to negative from stable and affirmed its B ratings.

“Italy-based facilities management company Rekeep's free operating cash flow (FOCF) was materially weaker than we expected in 2022, due to high energy prices during the year that adversely impacted its working capital and, to a lesser extent, its margins,” the agency said in a press release.

S&P noted Rekeep’s EBITDA margin narrowed to 8.5% in the first nine months of 2022 from 9.8% the previous year, albeit bolstered by €4.7 million in Italian government tax credits to compensate for the higher cost of electricity and gas.

“We forecast Rekeep will report an S&P Global Ratings-adjusted EBITDA margin of 9%-9.5% in 2022, improving to 9.25%-9.75% in 2023 but still lower than the 10%-11% margin the company reported in the past,” the agency said.

S&P warned it could downgrade Rekeep if FOCF remains negative or if its funds from operations cash interest covered declines under 2x for a prolonged period.

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