S&P trims Centurion

S&P said it lowered its ratings on Centurion Newco SpA (Engineering) and its debt to B- from B.

In November, Engineering reported an accounting error in its finance vertical, with a revenue overstatement of €17.4 million in the first nine months of 2022 and an accumulative current assets overstatement of €44.6 million, S&P said.

“We think the account overstatement indicates weaknesses in the company's governance structure, but we expect this will gradually improve under the new management team. We understand the company's overstatement has no effect on historical cash flow because the company never sent the inflated bills to customers.

“However, Engineering's current reporting and controlling structure means it cannot restate its historical accounts, which we think erodes the integrity of the company's earnings and leverage metrics. Furthermore, the company indicated that the issue has lasted for years, and it was likely an intentional account overstatement,” the agency said in a press release.

S&P said that even with the error corrected it sees Engineering’s S&P Global Ratings-adjusted debt to EBITDA staying above 11x in 2022 due to high transaction-related and other non-recurring costs, although it estimates the company's free operating cash flow will be positive in 2023.

The outlook is stable.

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