PARIS (Reuters) – Casino shares fell sharply on the Paris Stock Exchange on Friday after Moody’s decided to downgrade the distributor’s credit rating, with the financial rating agency citing market share losses, weak liquidity and high debt.
The rating agency lowered the distributor’s rating to “Caa1” from “B3” and attached it to a negative outlook in a difficult economic context for the sector in France due to high inflation.
Around 4:00 p.m. GMT, the Casino title plunged 13.64%, the largest drop in the SBF 120 (-1.73%), after hitting a historic low at 5.57 euros. The action of the parent company, Rallye, fell 13.97%.
“The downgrade reflects the continued loss of market share in retail in France, still negative cash flow in France and lower retail margins in France in 2022,” Moody’s said in a note dated Thursday.
The agency estimates that Casino will struggle to maintain its sales volume in 2023 due to rising prices, particularly in food, which is weighing on consumer confidence in a context of still fierce competition.
The negative outlook reflects uncertainty surrounding the group’s ability to stabilize its cash generation in this difficult market environment, Moody’s said.
The agency also highlights a “low liquidity profile” because the group depends on the ongoing process of asset disposals to be able to repay its maturing debt maturities.
Casino still has to refinance or repay about 1.2 billion euros in outstanding bonds by 2024 and another 1.8 billion by 2025, notes Moody’s.
Asked, Casino did not immediately respond to a request for comment.
(Written by Blandine Hénault and Claude Chendjou, with Piotr Lipinski and Silvia Aloisi, edited by Kate Entringer)
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