New York, May 01, 2015 -- Moody's Investors Service ("Moody's) today downgraded Avon Products, Inc.'s (Avon) Corporate Family Rating (CFR) to Ba2 from Ba1. Moody's also downgraded the Probability of Default Rating to Ba2-PD, and lowered the Speculative Grade Liquidity (SGL) rating to SGL-2. The downgrade of the CFR reflects Moody's concern that efforts to improve operating performance are not sufficient to offset the confluence of headwinds the company is facing -- including FX volatility, inflation, the IPI tax in Brazil and the continuing decline in active representatives. Moody's expects that free cash flow will decline meaningfully and leverage will increase to more than 5 times by the end of 2015. "It may be difficult for Avon to turn around its performance given the competitive and macroeconomic challenges the company is facing in key markets -- particularly since it is happening against a backdrop of significant FX volatility that is diminishing operating cash flow," said Nancy Meadows, a Moody's senior analyst and Vice President. That said, Avon benefits from significant scale, a global footprint, good liquidity and no near term maturities. The rating outlook is negative.

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