S&P turns Rovensa outlook to negative

S&P said it revised its outlook for Rovensa (Root Bidco Sarl) to negative from stable and affirmed the B ratings on the issuer and its senior secured term loan.

“Root Bidco's rating headroom has been exhausted given its very high leverage and negative FOCF in fiscal 2023 (ending June 30, 2023). Weaker demand and increasing pricing pressure have weighed on its performance in a challenging market with destocking along the supply chain. Extreme weather conditions have also affected key regions, namely Southern Europe (drought) and the western region of the U.S. (excessive rain).

“The integration of acquired businesses and the reorganization of the Rovensa Next segment, in which the sales team has been scaled up to accommodate future organic growth, have also temporarily depressed earnings,” S&P said in a press release.

The agency said it expects Root Bidco’s S&P Global Ratings-adjusted EBITDA to reach €135 million-€145 million pro forma the full-year contribution of the Cosmocel acquisition in fiscal 2023. This forecast falls short of the previous estimate of €155 million-€165 million.

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