S&P trims Tarkett Participation

S&P said it trimmed its ratings on Tarkett Participation and its loans to B+ from BB-. Tarkett has a €839 million and a $72 million term loan B and €350 million revolving credit facility.

“We forecast very limited or even negative FOCF in 2022. We anticipate the depressed FOCF will result from the group's lower profitability and slightly higher working capital linked to the increase in the inventory values and the gradual recovery of the commercial and sport segments. Tarkett will also pay the full-year value of the term loan B interest. Management budgeted capital expenditure (capex) of about €100 million in 2022, but anticipate that management will likely curtail its plans to preserve cash flows,” S&P in a press release.

The agency said it projects FFO to debt of 10%-15% in 2022-2023, which is commensurate with the B+ rating. “We also forecast an adjusted leverage of 5x-6x in that same period, due to our projections of lower EBITDA, and limited free cash flows.”

The outlook is negative.

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