Fitch downgrades Rolls-Royce rating as its share price continues to fall
Credit ratings agency Fitch today revised its outlook for embattled British engineering giant Rolls-Royce to negative, after the company issued a profit warning yesterday.
In a statement today, the agency said that while Rolls-Royce's financial profile is likely to recover in the medium to long term, "should the recovery stall or take longer than expected, leading to a prolonged period of weak cash generation, a downgrade is likely".
The company's shares remained three per cent down, at 519p, in mid-afternoon trading, after they closed 20 per cent lower yesterday.
Yesterday's warning, that full-year profits would be at the lower end of expectations, was one of a string of profit warnings issued by the company in recent months.
It "sharply weaker" demand in its wide-bodied aftermarket, corporate and regional aerospace services, as well as its offshore marine business.
Despite the lowering of its outlook, though, Fitch suggested Rolls-Royce is likely to recover eventually.
"Restructuring measures are likely to aid the recovery of key metrics over the medium term, but the ratings will face pressure if the company's FCF generation does not return to historical levels from around 2018, in line with our expectations of the company exiting the costly ramp up and programme transition phase of the product life cycle."