NEW YORK, Jan 20 (Reuters) - Standard & Poor’s on Tuesday cut ratings on Whirlpool Corp (WHR.N) to one notch above speculative, or “junk” status and said it expects demand for home appliances to fall sharply in 2009.
The agency cut the company’s corporate credit rating by one notch to “BBB-minus” and said the outlook is stable.
Whirlpool had about $3 billion of debt at end September.
The action “reflects Whirlpool’s weakened operating performance and weaker-than-expected credit measures,” S&P said in a statement.
The global market for home appliances is expected to suffer in 2009, with North America expected to be hit especially hard. Whirlpool generates about 60 percent of its sales in the region, further pressuring credit measures.
The company had a debt to EBITDA ratio of about 2.8 times in the year ended Sept. 30, while the ratio of funds from operations to total debt was about 20 percent.
“We believe that Whirlpool will be unable to restore credit measures closer to our previous expectations, including leverage in the 2.5 times area and adjusted FFO to total debt closer to 25 percent before 2010, when a possible rebound in the world economy and some pent-up demand for home appliances would result in a meaningful improvement in operating performance,” said S&P. (Reporting by Ciara Linnane; Editing by Dan Grebler)