Moody's downgrades Elior

Moody's Investors Service said it downgraded Elior Group SA's corporate family rating to B3 from B2, the probability of default rating to B3-PD from B2-PD and the rating on the backed senior unsecured notes due 2026 to B3 from B2.

“Today's downgrade of Elior's CFR to B3 reflects Moody's expectations that Elior's profitability, on a stand-alone basis, will be lower than previously forecasted in the next 12-18 months, as a consequence of the ongoing inflationary pressure that the business faces and the time lag required to fully pass-through price increases to customers.

“The rating agency expects that Derichebourg Multiservices (DMS), whose acquisition closed on April 18, 2023, will positively contribute to the company's profitability, albeit not fully offset the negative trends on the company's stand-alone business in fiscal 2023. Consequently, Moody's expects that FCF generation, on a Moody's adjusted basis and including DMS, will remain negative in fiscal year ending September 2023 (fiscal 2023) and for the fourth consecutive year, thus preventing any significant improvement in the liquidity profile,” Moody’s said in a press release.

The outlook remains negative.

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