Moody's backs Rockwell Automation's ratings
Tuesday December 16, 1:36 pm ET
Moody's backs Rockwell Automation's ratings but revises outlook to negative
NEW YORK (AP) -- Moody's Investors Service backed two of Rockwell Automation Inc.'s debt ratings, but revised its ratings outlook to negative based on expectations of reduced earnings in fiscal 2009.
The ratings agency backed the industrial parts maker's investment grade "A2" senior unsecured rating and "Prime-1" short-term rating, citing low debt levels as compared to cash flow.
Milwaukee-based Rockwell Automation last month predicted a profit decline of 18.5 percent in fiscal 2009 and a drop in revenue between 1 percent and 5 percent, not accounting for currency fluctuations.
The company said it expected recessionary conditions to continue in the United States and Europe, which could stall growth.
Even so, Moody's is optimistic that Rockwell will be able to weather the economic slowdown.
"Rockwell's performance and financial standing should be able to accommodate the consequences of the expected downturn in global industrial capital expenditures provided it continues to be free cash flow generative and sustains an acceptable liquidity profile," said Moody's.
The sum of Rockwell's cash at the end of September was $582 million and its guidance for free cash flow through fiscal 2009 exceeds its short-term debt by a "substantial magnitude," Moody's said.
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