Fitch Ratings upgraded Ecolab Inc.'s short-term issuer default ratings to F1 from F2 and removed them from under criteria observation, citing the company's strong liquidity and free cash flow generation and a consistently stable financial leverage profile and capital structure.
Fitch affirmed the company's long-term ratings at A-, with a stable outlook, citing Ecolab's strong market position, customer diversity and consistent free cash flow generation, offset by debt- and equity-oriented capital deployment.
The rating agency said Ecolab's planned spinoff of its upstream energy business by mid-2020 will improve its cash flow risk profile. Fitch expects Ecolab to use a dividend from the spinoff to reduce debt levels and repurchase additional shares.
The rating agency said the company, after spending about $525 million over the medium term, will then be able to return to its targeted leverage ratio of around 2x net debt to EBITDA.
