Expleo Group rating affirmed at CCC+ after debt extension conditions met

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Expleo Group CCC+ rating update

Highlights

Fitch affirmed Expleo Group's Long-Term Issuer Default Rating and senior secured term loan B at CCC+ after extension of the term loan B and EUR115 million revolving credit facility maturities to October 2026.
Fitch expects continued high credit risk, citing persistent tight liquidity, projected negative free cash flow into 2026, and leverage only improving gradually from 8.3x in 2025 to 6.7x through 2029.
EBITDA margin is forecast to recover from 7.4% in 2025 to about 9% through 2029, but execution risk remains high due to elevated personnel costs and sectoral exposure.

Debt extension underpins rating decision

As reported by Fitch Ratings, the agency has affirmed Expleo Group's Long-Term Issuer Default Rating at CCC+ and its senior secured term loan B at CCC+, with a Recovery Rating of RR4, while removing both from Rating Watch Negative.

The change follows Expleo's fulfilment of the condition precedent required to extend its term loan B and its EUR115 million revolving credit facility, after a deadline extension earlier in October 2026. That step makes effective the 2.5-year maturity extensions for both the fully drawn revolving credit facility and the term loan.

Fitch says the CCC+ rating continues to reflect high credit risk, driven by tight liquidity, high leverage and uncertainty over EBITDA recovery. The agency expects free cash flow to remain negative in 2026 because of higher debt costs, restructuring expenses and normalising working capital outflows, increasing reliance on factoring and revolving credit drawings in the near term.

Fitch expects liquidity to stay constrained in the short term before improving over the medium term. It says further repayment of the revolving credit facility is likely to depend on additional factoring and customer payments, in line with Expleo's seasonal cash flow cycle.

Profit recovery remains key to refinancing outlook

Fitch expects EBITDA recovery to help Expleo move to neutral-to-positive free cash flow in 2027 and 2028, which would ease liquidity pressure and future refinancing risk, assuming there is no further macroeconomic deterioration or operational underperformance. The agency also ties that outlook to the completion of the group's restructuring programmes in 2026.

Revenue is expected to decline again in 2026 after falling 8.5% in 2025, with like-for-like revenue forecast to slip 0.6% before recovering from 2027. Even so, recent disposals are expected to keep reported year-on-year revenue lower through 2028. Fitch says Expleo remains under volume pressure in France, the UK and Germany, which generated 74% of 2025 revenue, as weak macroeconomic conditions affect consulting demand and delay budget allocations in sectors including marine, public sector and energy.

The agency expects Expleo's Fitch-adjusted EBITDA margin to recover from 7.4% in 2025 to about 9% on average through 2029, supported by cost restructuring despite disposals. Still, it warns that execution risk remains elevated because personnel costs account for about 68% of revenue and the business remains exposed to labour cost inflation across its main markets.

Fitch adds that the deleveraging effect of EUR70 million in disposal proceeds is limited because payment-in-kind interest is expected to add about EUR60 million to the Fitch-adjusted term loan B balance by maturity. Even so, leverage is forecast to improve gradually from 8.3x at the end of 2025 to an average of 6.7x through 2029 as profitability improves.

The ratings agency also views Expleo's strategic shift toward aerospace and defence, along with efforts to reduce customer concentration, as potentially credit positive over time. It says those sectors offer higher margins, although benefits are likely to emerge only gradually given the maturity of those markets and their high barriers to entry.

Our earlier article examined the IMF’s latest outlook for Europe, highlighting an uneven recovery in which Germany, the UK and Spain show more resilience while France remains a weak spot. We also noted that persistent inflation, tight fiscal constraints and shifting trade dynamics can keep borrowing conditions challenging and credit risks elevated, particularly in the weaker-performing parts of the region.

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