25 April 2000 17:57 [Source: ICIS news]
LONDON (CNI)--French specialty chemicals company Rhodia was on Tuesday assigned triple B-plus long-term and A-2 short-term corporate credit ratings from Standard & Poor's (S&P), the international ratings agency.
It said the ratings, the first to be issued by S&P to Rhodia, reflected the company's "above-average business profile, underpinned by leading positions in the specialty chemicals industry as well as solid financial profile and sound policies".
S&P added that while Rhodia is clearly focused on the relatively non-cyclical specialty chemicals business, it retains some more commodity-oriented and thus more volatile products in its portfolio, although these are primarily for captive use as raw materials for the group's more profitable downstream activities. It said Rhodia enjoys favourable growth prospects, notably in the fast-growing fine chemicals segment. A marked focus on innovation and drastic cost-cutting measures should sustain Rhodia's competitive positions, added S&P.
The agency acknowledged that Rhodia's EBITDA (earnings before interest, depreciation and amortisation) margin rose from 11.8% in 1997 to 15.3% in 1999 but said it was still "subpar compared with industry standards". However, it said the profit margin should improve further, spurred by continuing restructuring.
S&P said the credit rating outlook was stable as it expects a substantial rise in cash-flow generation and an improvement of the financial measures temporarily weakened by the external growth policy of 1999 when Rhodia bought UK-based phosphate producer Albright & Wilson (A&W).
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