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S&P has revised Progroup's outlook to negative, rating unchanged at BB.

BASIC INDUSTRIES
  • It sees S&P adj. EBITDA of €175-185m, down from €206m (company reported €201m) last year & again sees the fall on prices (company reported EBITDA halving from €412m to €201m from 2022-23 on pricing).
  • Main issue seems to be its expectation for high expansion capex of €220m this yr (€185m in FY23). driving negative FOCF of €150m in 2024, down from +€23m in FY23 (as reference company reported FCF of €50m in FY23).
  • It sees above driving adj. leverage to 4.5* by the end of this year (from S&P 3.2*, company reported 3.1*) - it needs leverage below 4* in next 12 months to prevent downgrade.
  • It sees FOCF turning positive in FY25 to €20-40m on Capex declining to €130m.
  • We already saw Progroup pricing closer to wide-end of BB names (i.e. towards Moody's Ba3 Pos rating) - we don't revise FV yet, but Capex assumptions from S&P are high. As a counter, Progroup has run leverage up to 4.5* through the cycle in the past and still managed To deleverage quiet rapidly & in line with this its kept its long-term leverage target unch at 3*.
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