18th Mar 2014 18:19
LONDON (Alliance News) - Moody's Investor Service Tuesday changed downgraded Wm Morrison Supermarkets PLC ratings to Baa2 from Baa1.
Moody's said that the outlook on the ratings is negative and it affirmed the Prime-2 short term ratings of Morrisons.
"Today's rating action primarily reflects Morrisons' earnings contractionand weak profitability forecast in a structurally changing UK grocery sector," Moody's Vice president Sven Reinke said in a statement.
The news comes after Morrisons reported 13% year-on-year decline in Morrisons' underlying profit before tax after a 7% decline in the previous financial year, reflecting like for like sales decline.
Moody's added that Morrison's weak position in the growing online and convenience store channels as well as rising dividend payments, weigh on the company's credit metrics beyond the guidance for the previous rating category for an extended period of time.
However, Moody's said that Morrison's commitment to further increase its dividend payment when operating profitably is significantly deteriorating a constraint to the company's credit profile.
Morrisons shares closed up 1.1% at 209.6 pence Tuesday.
By Tom McIvor; [email protected]; @TomMcIvor1
Copyright © 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
MRW.L