Moody’s cites potential pressure on credit metrics and liquidity profile

  • Iceland’s debt rating downgraded by Moody’s
  • Pre-tax loss increased from £73.1m to £4.1m in FY22
  • Sales dropped 4.3% year-on-year to £3.5bn
  • Operating profit fell from £111.3m to £36.9m
  • Adjusted EBITDA decreased from £171.9m to £127.1m
  • Expenses totaled £30m, including Covid costs and HGV driver shortages
  • Record-breaking Christmas sales in Q3 offset by reduced online demand
  • 19 new stores opened in the previous financial year
  • Moody’s cites potential pressure on credit metrics and liquidity profile
  • Iceland faces challenges due to Covid-related sickness and delivery issues

Iceland Foods has experienced a downgrade in its debt rating by Moody’s due to a pre-tax loss of £4.1m for the 52-week period ended March 2022, compared to a profit of £73.1m in the previous year. Sales dropped by 4.3% from £3.7bn to £3.5bn, and operating profit fell from £111.3m to £36.9m. Adjusted EBITDA decreased from £171.9m to £127.1m in FY22. The company faced challenges such as Covid-related sickness, self-isolation, and HGV driver shortages in the second half of the year. Despite record-breaking Christmas sales in Q3, online demand decreased. Iceland opened 19 new stores during the previous financial year. Moody’s warns that profitability may remain depressed for up to 18 months and liquidity profile could deteriorate due to negative free cash flows and debt refinancing needs.

Factuality Level: 8
Factuality Justification: The article provides accurate information about Iceland Foods’ financial performance, including specific numbers and comparisons to previous years. It also includes quotes from Moody’s and Iceland themselves, which adds credibility to the report. The article does not include any irrelevant or sensational details, nor does it present personal opinions as facts.
Noise Level: 3
Noise Justification: The article provides relevant information about Iceland Foods’ financial performance and Moody’s downgrade, as well as the company’s plans to improve profitability. It also mentions specific challenges faced during the pandemic. However, it could benefit from more analysis or context on the broader implications of these events for the retail industry or the economy.
Financial Relevance: Yes
Financial Markets Impacted: Iceland Foods, a UK-based supermarket chain
Financial Rating Justification: The article discusses Iceland Foods’ financial performance and its impact on the company’s debt rating by Moody’s, which can affect investors and financial markets.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: Minor
Extreme Rating Justification: There is no mention of an extreme event in the text, and the financial situation of Iceland Foods is described as challenging but not catastrophic.

Reported publicly: www.retailsector.co.uk