Moodys.com
Close
Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Already a customer?
LOG IN
Don't want to see this again?
REGISTER
OR
Accept our Terms of Use to continue to Moodys.com:

PLEASE READ AND SCROLL DOWN!

By clicking “I AGREE” [at the end of this document], you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s inform​ation that becomes accessible to you [after clicking “I AGREE”] (the “Information”).   References herein to “Moody’s” include Moody’s Corporation, Inc. and each of its subsidiaries and affiliates.

Terms of One-Time Website Use

1.            Unless you have entered into an express written contract with Moody’s to the contrary, you agree that you have no right to use the Information in a commercial or public setting and no right to copy it, save it, print it, sell it, or publish or distribute any portion of it in any form.               

2.            You acknowledge and agree that Moody’s credit ratings: (i) are current opinions of the future relative creditworthiness of securities and address no other risk; and (ii) are not statements of current or historical fact or recommendations to purchase, hold or sell particular securities.  Moody’s credit ratings and publications are not intended for retail investors, and it would be reckless and inappropriate for retail investors to use Moody’s credit ratings and publications when making an investment decision.  No warranty, express or implied, as the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any Moody’s credit rating is given or made by Moody’s in any form whatsoever.          

3.            To the extent permitted by law, Moody’s and its directors, officers, employees, representatives, licensors and suppliers disclaim liability for: (i) any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with use of the Information; and (ii) any direct or compensatory damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud or any other type of liability that by law cannot be excluded) on the part of Moody’s or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with use of the Information.

4.            You agree to read [and be bound by] the more detailed disclosures regarding Moody’s ratings and the limitations of Moody’s liability included in the Information.     

5.            You agree that any disputes relating to this agreement or your use of the Information, whether sounding in contract, tort, statute or otherwise, shall be governed by the laws of the State of New York and shall be subject to the exclusive jurisdiction of the courts of the State of New York located in the City and County of New York, Borough of Manhattan.​​​

I AGREE
Rating Action:

Moody's confirms Metro AG's Baa3 issuer rating -- Metro AG will be renamed Ceconomy AG once the demerger has been completed - and assigns a (P)Ba1 CFR to Metro Wholesale & Food Specialist AG

27 Jun 2017

Note: On July 24, 2017, the press release was corrected as follows: In the REGULATORY DISCLOSURES section, color-coding was added to the following disclosure: “Items color coded in purple in this Press Release relate to unsolicited ratings for a rated entity which is non-participating.” Revised release follows.

London, 27 June 2017 -- Moody's Investors Service (Moody's) has today concluded the review of Metro AG's ratings initiated on 16 December 2016. The rating agency has confirmed Metro AG's Baa3 long-term and Prime-3 (P-3) short-term issuer ratings which are the ratings of the future Ceconomy AG. Metro AG will be renamed Ceconomy AG after the demerger has been concluded. The outlook is stable.

Concurrently, Moody's has assigned a provisional (P)Ba1 corporate family rating (CFR) to METRO Wholesale & Food Specialist AG (MWFS). The rating will be transitioned into a definitive rating at the conclusion of the demerger expected in the coming weeks. Metro AG's and METRO Finance B.V.'s long-term and short-term senior unsecured MTN program ratings were downgraded to (P)Ba1/(P)NP from (P)Baa3/(P)P-3 respectively, and METRO Finance B.V.'s senior unsecured instrument ratings were downgraded to Ba1 from Baa3. The outlook on MWFS' and METRO Finance B.V.'s ratings is stable. At the same time, Moody's downgraded to Ba1 from Baa3 all existing debt instruments issued by Metro AG -- which will be transferred to MWFS - and issued by METRO Finance B.V., and downgraded to NP from P-3 the senior unsecured commercial paper ratings of Metro AG.

"Our decision to assign a (P)Ba1 rating to MWFS and the confirmation of the Baa3 rating of Ceconomy AG reflects our view that the split of Metro AG's liabilities with almost the entire funded debt being transferred to MWFS results in a different credit risk for the two stand-alone companies." says Sven Reinke, a Moody's Senior Vice President -- and lead analyst for Metro AG and MWFS.

RATINGS RATIONALE

METRO AG / CECONOMY AG

Moody's rating action assumes that the demerger will go ahead as planned and that Metro AG will spin off the MWFS business alongside METRO Finance B.V. and that all publicly listed debt instruments as well as most of the existing funded debt will be transferred to MWFS. Metro AG will subsequently be renamed Cecomony AG. Ceconomy comprises Metro AG's current Media-Saturn business which is Europe's largest Electronics retailer.

The rating agency's view that Ceconomy is adequately positioned in the Baa3 rating category is driven by the company's large scale and geographic diversification with operations in 15 European countries, and the strong market position and brand recognition in most countries it operates in. Ceconomy has an extensive store network with more than 1,000 outlets and growing multi-channel capabilities. The rating agency positively recognizes the progress in recent years towards an integrated multi-channel business with strongly growing online sales which now account for around 9% of Ceconomy's revenues. At the same time, Moody's view of Ceconomy's rating also reflects the discretionary nature of the demand for most of the company's products and the highly competitive market environment with growing online competition.

Ceconomy had a mixed operating performance in H1 fiscal 2017 with flat revenues and lower EBIT of EUR280 million compared with EUR322 million in H1 fiscal 2016. However, the company's cash flow from operating activities remained healthy at EUR277 million supported by positive working capital cash flow of EUR84 million.

Importantly, Ceconomy has a strong balance sheet with only EUR285 million of funded debt and a high cash level of EUR1,032 million per 31 March 2017. Ceconomy's pro forma adjusted gross debt / EBITDA ratio stands at 3.4x and Moody's expects the metric to trend down over the next 12-18 months owing to gradually rising operating profitability and falling exceptional items. The high cash balance, which increased during H1 fiscal 2017 driven by a EUR250 million Schuldschein promissory note issuance, and the 10% equity stake in MWFS, provide Ceconomy with a strong financial position and additional liquid assets.

RATIONALE FOR STABLE OUTLOOK

The stable outlook reflects Moody's expectations that Ceconomy will gradually improve its operating profitability while relying on fewer exceptional items -- which the rating agency does not necessarily adjust for. Improving operating profitability and the possible monetization of the equity stake in MWFS would increase the company's financial flexibility as well as the headroom in the Baa3 rating category. In addition, Moody's expects that any potential acquisitions would be structured in a way which would protect Ceconomy's investment grade rating.

WHAT COULD CHANGE THE RATING UP/DOWN

Given the challenging market environment and relatively thin operating profit margins, upward pressure on the rating is unlikely to develop over the next 12 -- 18 months. However, positive rating pressure could occur if Ceconomy's gross leverage were to fall below 3.0x, with retained cash flow/net debt moving above 25% on a sustainable basis while maintaining a good liquidity profile.

Conversely, negative rating pressure would likely occur if Ceconomy's gross leverage were to exceed 3.5x and retained cash flow/net debt fall below 15% on a continued basis. A material deterioration in the company's liquidity profile would also likely result in negative pressure being exerted on the rating or outlook.

MWFS

Moody's rating assumes that the demerger will go ahead as planned and that almost all of Metro AG's existing funded debt will be transferred to MWFS. In the rating agency's view, MWFS does not have a sufficiently strong credit profile for Baa3 rating as it assumes almost the entire funded debt of the Metro AG. As of 31 March 2017, MWFS' funded debt amounts to EUR 5,167 million. The company's pro forma adjusted gross debt / EBITDA ratio is estimated at around 4.9x as of 31 March 2017 which Moody's believes is too high for an investment grade rating in particular in the light of MWFS' historic weakness in terms of operating cash flow generation. However, Moody's notes that March marks the high point of MWFS' leverage owing to the seasonal working capital cash flow pattern. The rating agency expects MWFS' financial profile to strengthen over the next 18 -- 24 months owing to the growing higher-margin food delivery business and a material reduction of restructuring related costs.

Moody's positively acknowledges the strong business profile with the large scale and geographic diversity of MWFS' Cash & Carry food wholesale business which operates around 751 stores and 79 depots in 35 countries. MWFS has leading market positions in many of these countries. The rating also reflects the increasing focus on the higher margin food delivery services, which was recently strengthened with the acquisition of the French food delivery company Pro a Pro, as well as the large portfolio of real estate assets with a book value of around EUR5 billion which provides financial flexibility and opportunities for value creation and cash flow generation.

However, Moody's also notes the constrained profitability of MWFS in its German home market, which has increased the company's reliance on cash flow generation in emerging markets such as Russia. Although recently stabilized, MWFS' Real German food retail business' EBIT margin remains low as the segment remains under pressure from its larger competitors who mostly operate supermarket and discount formats. During H1 of fiscal 2017, MWFS' sales increased only slightly by 0.5% driven by positive currency effects and negatively impacted by adverse calendar effects owing to the timing of Easter which fell into April in 2017 but into March in 2016. MWFS' EBIT before special items rose to EUR603 million compared with EUR496 million in H1 of fiscal 2016. However, the increase was mainly driven by property disposal gains of EUR118 million which Moody's adjusts for. Additionally, MWFS' operating cash flow generation was negative in H1 of fiscal 2017 as the company recorded a higher working capital cash outflow of EUR489 million which was EUR90 million higher than in H1 of fiscal 2016.

RATIONALE FOR STABLE OUTLOOK

The stable outlook reflects the rating agency's expectations that MWFS will improve EBITDA generation alongside falling exceptional items -- which the rating agency does not necessarily adjust for -- which would result in rising Moody's adjusted EBITDA and positive free cash flow generation. However, such improvement is in Moody's view only expected to occur gradually from fiscal 2018 onwards.

WHAT COULD CHANGE THE RATING UP/DOWN

Positive pressure could develop if MWFS successfully executes its strategy of stable operating profit generation, alongside reducing exceptional item recognition and improving cash flow generation partially driven by more efficient capital spending. Quantitatively, positive rating pressure could occur if MWFS' gross leverage were to fall below 4.25x, with retained cash flow/net debt of at least 15% on a sustainable basis while maintaining a satisfactory liquidity profile.

Conversely, negative rating pressure would likely occur if MWFS's gross leverage were to exceed 5.0x and retained cash flow/net debt fall below 10.0% on a continued basis. A material deterioration in the company's liquidity profile would also likely result in negative pressure being exerted on the rating or outlook.

PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Retail Industry published in October 2015. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

Ceconomy AG (Ceconomy), based in Dusseldorf, Germany, is Europe's largest Electronics retailer, and is focused on two main brands: Media-Markt and Saturn. In the financial year 2016, the company reported revenues and EBIT (before special items) of EUR21.9 billion and EUR466 million, respectively.

MWFS, based in Dusseldorf, Germany, is one of the world's largest food wholesale companies and also operates the fifths largest German food retailer, Real. In the financial year 2016, the company reported revenues and EBIT (before special items) of EUR36.5 billion and EUR1,106 million.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Items color coded in purple in this Press Release relate to unsolicited ratings for a rated entity which is non-participating.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Sven Reinke
Senior Vice President
Corporate Finance Group
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454

Marina Albo
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454

Releasing Office:
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454

No Related Data.
© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’S OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

MOODY’S CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS OR MOODY’S PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.

CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.

All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing the Moody’s publications.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.

Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any rating, agreed to pay to Moody’s Investors Service, Inc. for ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

​​​​​​
Moodys.com