Casino (-5.26% to 37.96 euros) restarts downward after escaping the declining market last Friday, while Standard & amp; Poor’s threat to switch its credit rating in the “speculative” category. Indeed, the rating agency put under negative review Note BBB- distributor of believing in particular that its exposure in Asia and Brazil may weigh on its operating performance and dilute the positive impact of debt reduction plan initiated month last.
In Brazil, Casino is particularly manhandled on sales of electronic goods, a segment in which it is exposed with its Via Varejo subsidiary, where it recorded a net decrease in activity of over 15% in 2015. This underperformance can be explained by the recession in the first Latin American economy, including S & amp; P downgraded last September. In Asia, the situation is also difficult with a decline of nearly 1% over the year, with -2.4% in the fourth quarter.
For the rating agency, these two markets will weigh Casino on the profitability of which will depend in part on the performance of its home market, France. In this difficult environment operationally, S & amp; P considers that the debt level is very high and Casino questions the impact of the plan announced last month.
As part of its review, the rating agency will also evaluate the impact on its diversification disengagement of Thai and Vietnamese activities. For its part, Casino said he was “attached to its issuer status” Investment Grade “” and that “the improvement of its operating performance expected in France in 2016 and the scale of the divestment program initiated are important elements that will strengthen its financial structure “
Finally, S & amp;. P pointed to the fact that the situation Rallye, the holding company that controls Casino, weighs on the distributor’s risk profile. Rally needs of dividends paid by a subsidiary to service its debt, the agency noted. On this point, S & amp; P has met the expectations of Muddy Waters, the activist fund that had pointed last month’s high level of indebtedness Rallye and Casino, criticizing the way the assessment by the rating agency the financial position of the distributor
“S & amp;. P recognizes (…) that Casino will pay dividends to honor the service of the large debt Rally, but the best use of cash should be the repayment of own debt Casino “Muddy Waters wrote in a message communicated Reuters.
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