Kingfisher upgraded to BBB/A-2 by S&P thanks to balanced financial policy
Standard and Poor's Ratings Services (S&P) have upgraded their rating on UK retailer Kingfisher, on grounds of low leverage and balanced financial policy.
S&P praised Kingfisher's reduction of adjusted debt over the last 12 months, which it said have manifested in stronger credit metrics and a free operating cash flow that covers dividends and most of the targeted amount of share buybacks.
Funds from operations (FFOs) rose to 42% in the fiscal year ended 31 January 2014, a result of the company eliminating its pension deficit and lower future lease expenses.
Furthermore, the group's free operating cash flow (FOCF) to debt remained above 25% over the period.
"We look favorably on management's financial policy that balances both capital expenditures and shareholder remuneration," S&P said. Kingfisher's size, and the strong purchasing power that comes with it, helps the company to defend itself against competition," it added.
As such, Kingfisher's outlook was deemed stable, reflecting an "expectation of solid operating performance, based on like-for-like sales growth and a broadly stable EBITDA margin."