The recent announcement of Invensys to dispose of its rail division to Siemens for a total amount of GBP 1,742 million improves Invensys' positioning in the Ba1 rating category strongly as it enables Invensys to fully cover its sizeable pension deficit, payout a sizeable dividend and have cash available to further develop its remaining businesses. However, the Ba1 rating continues to reflect i) the company's still relatively low and recently declining operating margins (6.6% on a LTM basis and around 8-9% on average over the past five years, based on Moody's adjusted data), ii) positive albeit modest and declining free cash flow generation - 4% of revenues on an LTM basis and approximately 5% of revenues on average over the past five years, based on Moody's adjusted data -, but also iii) a very solid financial profile - on an Moody's adjusted basis - and strong liquidity, particularly in view of the planned disposal of the Rail business.
The positive outlook on the rating reflects Moody's expectation that despite the disposal of the higher but declining margin Rail business, Invensys will still be able to improve and sustain operating margins in the 10-15% range and to generate meaningful free cash flow in a 5-10% range in percentage of revenues. Pro-forma for the sale of Invensys Rail, the company's low adjusted leverage gives it significant strategic flexibility to boost its most profitable businesses, in particular its industrial software activities. Future potential M&A activity to boost such activities would not change Moody's positive outlook, provided that the company's main debt ratios remain in line with the current rating category -- for instance, for the Ba rating category we expect an interest coverage in a 3-4x range.
Moody's views Invensys' very low prospective leverage as an enhancing factor of the group's overall credit risk profile. Management's commitment to maintain a low leverage on a Moody's adjusted basis is a further positive factor in our evaluation, and could allow the company to achieve a higher rating even if its operating margins and free cash flow generation remain at the low end of the expected ranges (see above).
Assuming the successful completion of the sale of Invensys' Rail business, the group will generate approximately GBP 1.8 billion in revenues, of which 72% from industrial software, systems and equipment, and 28% of from commercial equipment and appliance controls. The largest end markets will be consumer cyclicals, oil and gas and general industries, each representing 20-25% each of the revenues of the new and smaller group. Emerging markets will represent approximately 35% of revenues and 52% of the order book. The retained businesses enjoy EBIT margins varying from mid single-digit in appliances to the mid twenties in industrial software applications. Growth rates also vary substantially across businesses, from 16% in software to a decline of 14% in appliances (2012 data versus 2011). In industrial software, the company has a leading niche market position which should allow it to continue to grow rapidly leveraging on its positions in emerging markets and through small bolt-on acquisitions.
Moody's recognizes the progress made by Invensys over the past five years in streamlining the company, focusing on the three businesses of rail, controls and operations management whilst improving its operating performance and (adjusted) credit metrics. However, Invensys' cash flow generation has weakened over the same period of time and the group has faced significant challenges in managing a large nuclear power project in China. The problems with the installation of safety systems at Chinese nuclear power stations had an impact on profit of GBP40 million last year plus an additional write-off of GBP20 million related to the Rail division. This has exposed the company's relatively small size in a market increasingly characterized by large and complex orders, both technically and financially.
The company's cash flow generation has weakened since 2009 when it generated GBP261 million of cash from operations and GBP199 million of free cash flow after capex (both on a Moody adjusted basis). In FY 2011/12, CFO and FCF amounted to GBP123 million and GBP18 million respectively. In the first six months of FY 2012/13, the company's CFO was a negative GBP8 million and FCF was a negative GBP49 million. However, we note that the recent performance of the company reflects major project milestones and temporary customer payment delays in the Rail division. We therefore expect such effects to be reversed in the second half of the year and the disposal of Invensys Rail to have a positive effect on the company's cash flow generation.
The pension agreement outlined in relation to the planned disposal of Invensys Rail would result in cash savings of over GBP40 million per annum, thus more than halving the company's top-up cash payments, and further enhancing the group's free cash flow generation in the medium term. In FY 2014, free cash flow is expected to be constrained by cash outflows of approximately GBP60 million related to tax and restructuring payments arising in relation with the planned disposal. The company expects annual cost savings of around GBP25 million from April 2014. Following the disposal of Invensys Rail, Moody's expects the remaining businesses to generate positive free cash flows before restructuring expenses and other cash outflows related to the disposal in a 5-10% range in percentage of revenues.
Invensys' adjusted debt ratios remained strong for the current rating category and will be further strengthened by the planned disposal. In the financial year ended March 2012, Moody's adjusted interest cover was 3.5x (EBITA to Interest expense) and 4.3x on a cash basis (FFO + Interest expense to Interest Expense), down from 4.8x and 5.8x in the previous year. Also, the ratio of FFO to debt was around 25%, down from approximately 35% a year before. Pro-forma for the sale of the rail business, the group's adjusted debt would be slashed and its debt-based metrics would substantially improve -- for instance, we estimate that pro-forma LTM RCF to gross debt would be well over 60% assuming that most operating leases remain with the group. Even on a gross debt basis, Invensys' debt metrics would therefore remain well above the requirements for the current rating category, giving the company substantial strategic flexibility and underpinning the currently positive outlook of its ratings.
Liquidity was more than adequate at the end of September 2012, with no outstanding debt maturities and a debt free net cash position of GBP175 million, down from GBP262 million in March, and two five-year bank facilities totaling GBP600 million signed in March 2012, of which GBP250 million is available for cash drawings and GBP350 million is available for the issuance of guarantees. The announcement of the sale of the rail business will boost the company's liquidity with approximately GBP372 million of the expected sale proceeds to be retained by the group to accelerate its strategic development through investment in the business and acquisitions.
Invensys's net pension liability rose to GBP490 million from GBP426 million in March reflecting lower discount rates applied in the calculation of the funding deficits. The bulk of the group's plan assets remain invested in fixed income instruments. Annual top-up cash payments amount to approximately GBP60-70 million. Assuming successful completion of the sale of the rail business, Invensys would make a GBP400 million contribution to the UK Pension Scheme, thus drastically reducing the reported net pension liability, and make an additional GBP225 million contribution to a be held in trust and to be used as a reserve for future potential funding requirements.
We expect Invensys to continue to benefit from its relatively large exposure to emerging markets -- representing well over half of its order book -- and thus somewhat insulated from the weak European markets. Invensys' diversified business profile, with software, consulting, and appliance controls, should also contribute to mitigate the effect of any potential further deterioration in the business cycle.
The rating could be upgraded if Invensys i) sustainably improves its operating margins over time above 10%; ii) generates meaningful levels of free cash flow - before growth investments and dividends -- in a 5-10% range in percentage of revenues; whilst iii) maintaining a solid financial profile with, for instance, an interest cover of at least 4 times on a Moody's adjusted basis. We note that the company already has debt metrics exceeding the requirements for the current rating but also that its profitability and free cash flow generation ability remain in line with the Ba rating category. The Ba1 rating and positive outlook factor in Invensys' strong debt metrics and expectations of operational improvements.
The rating is unlikely to be lowered based on the current operational and debt metrics. That said, it could be lowered if operating margins structurally remained at the low end of the 5-10% range and if its free cash flows -- before growth investments and dividends -- remained at the low end of the 0-5% range in percentage of revenues. Potential future M&A activity is unlikely to trigger any negative rating action given the company's currently and prospectively strong financial profile.
The principal methodology used in rating Invensys plc was the Global Manufacturing Industry Methodology published in December 2010. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.
Invensys is a UK-listed technology company providing products and solutions for process control in a broad range of industries. Its revenue for the year ending March 2012 was about GBP 2.54 billion. The company comprises three divisions -- operations management, which provides hardware and software systems to control installations such as petrochemical plants; the rail business, which makes signaling systems; and controls, which provides controls for household and commercial appliances, such as washing machines. On November 28th, Invensys announced that it agreed to sell its Invensys Rail business to Siemens for GBP1,742 million in cash to refocus on industrial software, systems and controls.
For ratings issued on a program, series or category/class of debt, this announcement provides relevant regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides relevant regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides relevant regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing a rating.
Moody's adopts all necessary measures so that the information it uses in assigning a rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.
Please see Moody's Rating Symbols and Definitions on the Rating Process page on www.moodys.com for further information on the meaning of each rating category and the definition of default and recovery.
Please see ratings tab on the issuer/entity page on www.moodys.com for the last rating action and the rating history. The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.
Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.
Roberto Pozzi Vice President - Senior Analyst Corporate Finance Group Moody'sDeutschland GmbH An der Welle 5 Frankfurt am Main 60322 Germany JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454 Matthias Hellstern Managing Director Corporate Finance Group JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454 Releasing Office: Moody's Deutschland GmbH An der Welle 5 Frankfurt am Main 60322 Germany JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454 (C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.
CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. ("MIS") AND ITS AFFILIATES ARE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND CREDIT RATINGS AND RESEARCH PUBLICATIONS PUBLISHED BY MOODY'S ("MOODY'S PUBLICATIONS") MAY INCLUDE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY'S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY'S OPINIONS INCLUDED IN MOODY'S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. CREDIT RATINGS AND MOODY'S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY'S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY'S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY'S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY'S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.
ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED,DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT.
All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided "AS IS" without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process. Under no circumstances shall MOODY'S have any liability to any person or entity for (a) any loss or damage in whole or in part caused by, resulting from, or relating to, any error negligent or otherwise or other circumstance or contingency within or outside the control of MOODY'S or any of its directors, officers, employees or agents in connection with the procurement, collection, compilation, analysis, interpretation, communication, publication or delivery of any such information, or (b) any direct, indirect, special, consequential, compensatory or incidental damages whatsoever (including without limitation, lost profits), even if MOODY'S is advised in advance of the possibility of such damages, resulting from the use of or inability to use, any such information. The ratings, financial reporting analysis, projections, and other observations, if any, constituting part of the information contained herein are, and must be construed solely as, statements of opinion and not statements of fact or recommendations to purchase, sell or hold any securities. Each user of the information contained herein must make its own study and evaluation of each security it may consider purchasing, holding or selling.
NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER.
MIS, a wholly-owned credit rating agency subsidiary of Moody's Corporation ("MCO"), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MIS have, prior to assignment of any rating, agreed to pay to MIS for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,500,000. MCO and MIS also maintain policies and procedures to address the independence of MIS's ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading "Shareholder Relations -- Corporate Governance -- Director and Shareholder Affiliation Policy."
Any publication into Australia of this document is by MOODY'S affiliate, Moody's Investors Service Pty Limited ABN 61 003 399 657, which holds Australian Financial Services License no. 336969. This document is intended to be provided only to "wholesale clients" within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY'S that you are, or are accessing the document as a representative of, a "wholesale client" and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to "retail clients" within the meaning of section 761G of the Corporations Act 2001.
Notwithstanding the foregoing, credit ratings assigned on and after October 1, 2010 by Moody's Japan K.K. ("MJKK") are MJKK's current opinions of the relative future credit risk of entities, credit commitments, or debt or debt-like securities. In such a case, "MIS" in the foregoing statements shall be deemed to be replaced with "MJKK". MJKK is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly owned by Moody's Overseas Holdings Inc., a wholly-owned subsidiary of MCO.
This credit rating is an opinion as to the creditworthiness or a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors. It would be dangerous for retail investors to make any investment decision based on this credit rating. If in doubt you should contact your financial or other professional adviser.
Nachrichten zu Invensys PLCShs
- vom Unternehmen
- Peer Group
Relevant: Nachrichten von ausgesuchten Quellen, die sich im Speziellen mit diesem Unternehmen befassen
Alle: Alle Nachrichten, die dieses Unternehmen betreffen. Z.B. auch Marktberichte die außerdem auch andere Unternehmen betreffen
vom Unternehmen: Nachrichten und Adhoc-Meldungen, die vom Unternehmen selbst veröffentlicht werden
Peer Group: Nachrichten von Unternehmen, die zur Peer Group gehören
Analysen zu Invensys PLCShs
|29.11.2012||Invensys hold||Deutsche Bank AG|
|29.11.2012||Invensys hold||Société Générale Group S.A. (SG)|
|29.11.2012||Invensys neutral||Exane-BNP Paribas SA|
|16.11.2012||Invensys overweight||J.P. Morgan Cazenove|
|02.12.2011||Invensys buy||Citigroup Corp.|
|29.11.2012||Invensys hold||Deutsche Bank AG|
|29.11.2012||Invensys hold||Société Générale Group S.A. (SG)|
|29.11.2012||Invensys neutral||Exane-BNP Paribas SA|
|19.11.2012||Invensys hold||Société Générale Group S.A. (SG)|
|16.11.2012||Invensys neutral||UBS AG|
|24.03.2011||Invensys sell||UniCredit Research|
|15.05.2009||Invensys sell||Société Générale Group S.A. (SG)|
|14.05.2009||Invensys sell||Société Générale Group S.A. (SG)|
Alle: Alle Empfehlungen
Buy: Kaufempfehlungen wie z.B. "kaufen" oder "buy"
Hold: Halten-Empfehlungen wie z.B. "halten" oder "neutral"
Sell: Verkaufsempfehlungn wie z.B. "verkaufen" oder "reduce"
Private Krankenversicherung Tarifvergleich
Mehr zur Invensys-Aktie
Heute im Fokus
US-Automarkt ist weiter nicht zu bremsen. Commerzbank gründet Risikokapital-Tochter für Investitionen in Startups. Bundesbank pocht auf Kompetenzen bei künftiger Bankenaufsicht. General Motors will 2016 in Europa endlich wieder Gewinne einfahren. Volkswagen kämpft weiter mit Absatzflaute in USA. Südzucker fallen vor Quartalszahlen auf Mehrjahrestief. Streik kostet Lufthansa zweistelligen Millionenbetrag. Deutsche Post dreht an der Portoschraube.
Welche Aktien zählt Warren Buffet zu seinem Portfolio?
Diese Aktien sind auf den Verkauflisten der Experten
Diese Aktien sind auf den Kauflisten der Experten