Moody’s has downgraded the corporate family rating of Grifols from B2 to B3, citing high leverage and a slow recovery in free cash flow.
The rating agency also noted that Grifols’ excessive indebtedness, even after its recent asset sale, and its limited predictability of financial performance and risk management have contributed to the downgrade.
Moody’s stated that Grifols’ metrics align with a B3 rating for the next 12 to 18 months.
Moody’s highlighted governance factors, including the company’s complex and opaque organizational structure, as a key contributor to the downgrade.
Moody’s drops Grifols to just one notch of Caa1
The agency acknowledged that Grifols has made some positive changes to its governance, including the separation of management and shareholders, and the appointment of a new CEO, but warned that there is limited history of the company operating after these changes.
Moody’s described the B rating as referring to speculative issuers subject to high credit risk, and Grifols is only one step above Caa1, which is characterized as low-level and subject to very high credit risk.
Moody’s placed Grifols’ rating under review for downgrade at the beginning of March after it presented unaudited 2023 results, with net profit 71% below the previous year.
The company reported a net profit of 21 million euros in the first quarter of this year, an improvement of 129 million compared to a year ago.
Grifols recently announced the closing of the sale of 20% of its Chinese subsidiary Shanghai Raas to the Haier Group for 1.6 billion euros.