Moody's has lowered the International Distributor of Food (DIA) rating from Baa3 to Ba2 by two steps. junk bond and has put it under review with a negative perspective. The reduction occurs after the announcement of the reduction of results (profit warning) launched by the supermarket chain on Monday, in which it announced a 40% reduction in EBITDA compared to its latest forecast.
"Our decision to downgrade DIA's ratings and place them under review reflects Moody's view that earnings will fall significantly in 2018 and 2019, due to market share losses in Spain and the depreciation of the currency in emerging markets, which raises the leverage well above our expectations of an investment grade rating, "says Vincent Gusdorf, vice president of Moody's and principal analyst at DIA.
The agency notes that the magnitude of the benefit review highlights the weaknesses in DIA's business model and governance, "which will probably make it difficult for it to regain its competitive position and improve its operational performance in the future,"
Moody's notes that DIA's ebitda will fall sharply in the next 18 months, and earnings will continue to decline in 2019, albeit at a slower pace, "because DIA faces headwinds in all its markets, which will not be compensated by possible cost reduction measures ".
The price of DIA recovered today by 5.36% and closed at 0.896 euros, but since last day 12 has lost more than half of its value.
In addition, the agency expects DIA to announce a strong restructuring in the coming years since, if it does not retain the franchisees, who operated 57% of the stores of DIA on June 30, 2018, the decrease in profits may be exacerbated.