Ratings agency Fitch has cut its rating on Groupe Casino from BBB- to BB+, a drop of one notch, reflecting the ‘weaker-than-expected profit growth in Casino's core French market in 2016 relative to Fitch's expectations’.
In a statement, Fitch said that it forecasts that the ‘pace of operating performance and cash generation improvement for 2017 and 2018 will be weaker than previously envisaged on a proportionally consolidated basis’, due to the high weight of France in the group’s results.
The ratings agency said that it did expect EBITDA to see a rise ‘due to a successful repositioning strategy’, however it believes Casino’s French operations ‘will continue to face challenging market conditions’.
Downgrade
The downgrade comes just over a year after S&P also cut its rating on Casino, following an ‘attack’ by short seller Carson Block’s Muddy Waters organisation.
While Fitch sees Casino’s Brazil operation improving, and acknowledges ‘Casino's somehow lower presence in the challenged and low-margin hypermarket format relative to Carrefour’ in France, it noted that EBITDA uplift is likely to be ‘capped by weak demand and high competition’.
© 2017 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine
