Moody’s Changes Brenntag Ratings From Stable to Positive

Ratings agency Moody's has changed all of German distributor Brenntag's ratings to positive from stable. This includes the company's senior unsecured guaranteed notes maturing in 2018.

"Our positive outlook on Brenntag's Ba1 ratings recognizes the ability of Brenntag to maintain a stable financial performance even under persisting weak general economic conditions in its reference European markets, given its large scale and the breadth of its geographic and product diversification, which underpin its strong business profile," said Gianmarco Migliavacca, Moody's vice president and lead analyst for Brenntag.

"The change in outlook also acknowledges the progress made by the company in improving its credit metrics, and our expectation of its ability to gradually achieve further improvements over time," Migliavacca added.

Moody's expects that Brenntag will achieve low single-digit revenue and Ebitda growth, due mainly to the expected full-year positive impact of a number of small bolt-on acquisitions completed in the second half of 2012 and early 2013. This, the agency said, should offset the anticipated flat or slightly negative organic growth in operations over the coming quarters, particularly in Europe, which accounts for nearly 47% of the distributor' consolidated revenues.

In the first quarter of 2013, Brenntag lifted its sales by 1.4% year-on-year to €2.4 billion. Gross profit increased by 0.6% to €478 million, but operating Ebitda declined by 4% to €165 million. The distributor said it expects gross profit and operating Ebitda (before possible one-off effects) to increase this year, but assuming that the general economic situation will not improve it forecast a slowdown in growth.