(The following statement was released by the rating agency)
Oct 04 - Fitch Ratings anticipates that Southern European utilities will continue to prioritise the management of their cash flows and liquidity in order to protect their credit profiles.
"These companies are facing important challenges, especially in their domestic markets, where they are exposed to regulatory and fiscal intervention and weak demand and pricing as a result of the prolonged recessions in their economies," says Borja Monforte, an Associate Director in Fitch's EMEA Energy, Utilities & Regulation team.
In a newly-published special report entitled "Cash Flow Management in Difficult Times - Utilities in Southern Europe Take Action" Fitch comments that a reduction of capex and build-up of a liquidity buffer have been the most common actions taken to date. Disposals of non-core assets and a reduction in cash dividends have also been used as tools to weather the storm, but to a lesser extent.
"Integrated utilities have been more active in the management of their cash flows compared with regulated ones. This is likely to be directly linked to the more volatile nature of a significant part of their businesses," adds Monforte.
Link to Fitch Ratings' Report: Cash Flow Management in Difficult Times ((Bangalore Ratings Team, Hotline: +91 80 4135 5898, Bhanu.email@example.com, Group id: BangaloreRatings@thomsonreuters.com, Reuters Messaging: Bhanu.Priya.firstname.lastname@example.org))