Thursday March 27, 02:29 PM
Sara Lee cut to 'BBB' on slower-than-expected improvement in earnings - Fitch
MUMBAI (Thomson Financial) - Fitch Ratings downgraded Sara Lee Corp (NYSE: SLE - news) , citing slower-than-anticipated improvement in operating
earnings and margins as the company's transformation plan has progressed.
The packaged foods company's long-term issuer default rating was cut to 'BBB' from 'BBB+'; senior unsecured notes to 'BBB' from 'BBB+'; bank credit facility to 'BBB' from 'BBB+'.
Fitch affirmed the short-term IDR and commercial paper ratings at 'F2'.
The agency said Sara Lee's margin improvement has been muted by high input costs and promotional spending at a rate well above sales growth.
It (Frankfurt: A0MLX5 - news) added that rising input costs are likely to continue to reduce the pace of earnings and margin improvement while pricing actions taken to offset higher costs could hit volumes.
Fitch said Sara Lee's credit ratings are supported by the company's recent debt reduction, the cash flow generation of the current businesses, and expectations for gradual improvement in operating performance and margins.
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