Iran Air says signs deal to buy 80 Boeing passenger planes
DUBAI, Dec 11 Iran Air said it signed a deal on Sunday to buy 80 passenger planes from U.S. aircraft maker Boeing, state news agency IRNA reported.
Overview -- Global cosmetics company Avon Products Inc.'s operating results continue to be weak and credit metrics have deteriorated over the past year. -- We are lowering our corporate credit rating on Avon to 'BBB' from 'BBB+'. -- The outlook is negative, reflecting our concern that weak operating results may persist in light of continued operating disruptions in Avon's major markets. These may be further exacerbated by the uncertainty caused by a longer-term company strategy that is on hold until a new CEO is placed, and by potential management distractions from the ongoing SEC investigation. Rating Action On March 16, 2012, Standard & Poor's Ratings Services lowered its corporate credit rating on Avon Products Inc. to 'BBB' from 'BBB+'. The rating outlook is negative. At the same time, we lowered our ratings on the company's senior unsecured notes to 'BBB' from 'BBB+'. The 'A-2' short-term rating remains unchanged. We believe the company's strong liquidity and good access to capital markets support the short-term rating. Rationale Today's rating action reflects the company's weak operating results, and credit metrics deterioration amid persistent soft global economic conditions and continued operating disruptions in Brazil. Brazil is a key market for the company. Service delays related to the implementation of Enterprise Resource Planning systems pressured sales and profitability in Brazil. The rating action also reflects our expectations for some margin erosion in 2012 due to higher operating expenses related to increased investment in the company's "representative value proposition" (RVP) broad-based recruitment and reward platform, rising commodity costs, and expenses related to the ongoing investigation under the Foreign Corrupt Practices Act (FCPA), all will contribute to lower margins and earnings. We believe an operating turnaround could be more difficult to manage than previously expected. In December the company announced that it is seeking to replace its CEO, and longer-term company strategy will depend on the new CEO. Without a clear longer-term strategy in place, we are uncertain about the company's ability to execute an operating turnaround over the next year. The SEC's formal investigation related to the company's possible violations of the FCPA and Regulation FD adds additional risk. The bribery investigation and potential disclosure violation could be a distraction for management and could lead to fines and other regulatory action against the company. Our ratings on U.S.-based cosmetics company Avon Products incorporates our view that the company's business risk profile continues to be "satisfactory" and its financial risk profile as "intermediate", as our criteria define these terms. Avon has sustained its good market share in the direct sales channel. It has also sustained a broad international presence, with more than 75% of the company's revenue generated outside North America. Additionally, the Avon brand continues to exhibit brand strength. However, we believe the risks of direct sales distribution and near-term operating difficulties, especially in its Brazil, Russia, and North American businesses, somewhat offset the company's strengths. Avon's intermediate financial risk profile is supported by its continuing strong liquidity and credit measures, which, despite the deterioration, remain in line with the indicative financial ratios for the "intermediate" descriptor. This includes adjusted leverage from 2x to 3x. Credit metrics have weakened as a result of declining profitability and higher debt levels. The ratio of total debt to EBITDA for fiscal year 2011 increased to about 2.7x. This compares with 2.6x leverage in the prior year and historical levels of 1.7x, with the leverage increase primarily attributable to the debt-funded acquisition of Silpada Designs Inc. in July 2010. We believe credit measures could further deteriorate if the company is not able to improve operating results over the next year. Avon's operating performance has declined significantly since 2009, despite various restructuring programs that generated significant annual cost savings. The company's EBITDA margin has been on a declining trend and is below its peers, contracting about 60 basis points from the prior year, to about 13% at fiscal 2011, and nearly 300 basis points since 2008. Our assumptions for Avon over the next year include the following: -- Low-single-digit revenue growth, as we expect softness will persist in some of its key markets. -- EBITDA margin between 12% and 13%, as margin pressure from higher commodity costs, labor costs, and operating expenses related to investment spending continues. -- Flat capital expenditures of about $275 million. -- Dividends of about $400 million to be funded with cash flow generation. Under these base case assumptions, we expect the company's credit metrics will remain near its current levels, which includes adjusted leverage in the high-2x area in fiscal 2012. We forecast the ratio of funds from operations to total adjusted debt will be about 30%, and free operating cash flow to be $400 million to $500 million over the next year. Avon continues to have large scale and geographic diversity, which can generally compensate for regional weaknesses. Its diverse operating base also helps offset the impact of foreign currency fluctuations in regional markets. Developing markets remain a significant portion of the company's sales, and we expect them to continue to be an important component of Avon's long-term growth strategy. Liquidity Avon has "strong" liquidity (as defined in our liquidity criteria), with sources of cash that are likely to exceed uses for the next 12 to 24 months. We expect the company's substantial cash balances, cash flow generation, and access to capital markets to be more than adequate to support its operating needs and debt maturities over the next couple years. The next debt maturity is in 2013. Our view of the company's liquidity profile incorporates the following expectations: -- We expect coverage of uses of cash to exceed 1.5x in the next year and 1.0x in the next 24 months. -- Cash sources include existing cash balances of $1.3 billion (of which a significant portion is held overseas) and a $1 billion commercial paper program backed by a $1 billion revolving credit facility that is due in 2013. At the end of fiscal year 2011, there was nothing outstanding on the revolving credit facility and $709 million outstanding under the commercial paper program. -- We expect cash uses to include some investment in working capital, about $275 million in capital spending, and about $400 million in dividends. -- We expect net sources of cash would be positive even with a 30% drop in EBITDA. -- The company has a minimum interest coverage covenant, which we expect the company will maintain sufficient covenant cushion on. -- We expect Avon could likely absorb low-probability shocks based on its positive cash flow and current cash balances. Outlook Our rating outlook on Avon is negative, given the continued operating issues in Brazil and softness in other key markets, including Russia. Furthermore, we are uncertain as to whether the company will be able to execute an operating turnaround and improve credit metrics over the next year, given the lack of clear strategy without a new CEO in place and the ongoing SEC investigation, which could be a further distraction and adds some risk to the company's reputation. We also expect higher investment spending on representatives, rising commodity costs, and global economic conditions will continue to affect the company's sales base and margins. We would contemplate lowering the rating if the company is not able to improve its operating results, or if the bribery and FD regulation investigations lead to additional costs and result in further deterioration of credit metrics, such that leverage increases to above 3x. Leverage could rise to this level if debt increased 11% to $4.4 billion, or if EBITDA fell 10% (assuming debt levels remain unchanged). If we lower the long-term rating to 'BBB-', we would lower the short-term rating to 'A-3' based on our criteria. Alternatively, we could consider a stable outlook if the company is able to resolve some its operating issues in its key markets and stabilize its operating results, such that leverage is lowered and sustained near 2.5x. This could occur if EBITDA increases 8% (assuming debt levels remain unchanged). Ratings List Downgraded; Short-Term Rating Unchanged To From Avon Products Inc. Corporate credit rating BBB/Negative/A-2 BBB+/Negative/A-2 Senior unsecured BBB BBB+ Rating Unchanged Avon Capital Corp. Commercial paper A-2
ACCRA, Dec 11 Ghana's President-elect Nana Akufo-Addo needs to act fast to deliver on his campaign promise to create jobs, restore rapid growth, build a dam in every village and a factory in every district if he is to satisfy an electorate eager for change.
* Foreign minister is main party's preferred candidate (Adds M5S comment)