Morrisons paid double of what it earned last year in interest, with earnings covering only half of its £375 million interest bill.
According to reporting by The Times, the supermarket giant is set to pay off an estimated £795m in interest over the next two years.
This adds to Morrisons £6 billion debt pile, which came following its takeover by US private equity firm, Clayton, Dubilier & Rice in 2021.
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This comes as the grocery retailers credit rating was downgraded last week after reporting a drop in its sales and profits performance.
Credit rating agency Moody’s, said Morrisons ability to repay its debts had switched to negative from stable, indicating far higher risk.
While Morrisons free cashflow of £134m was cancelled out by its £375m interest payment and a £57m lease payment, according to Moody’s calculations, it did believe this could turn positive as a result of the McColl’s acquisition last year.
However, Moody’s also cited an “aggressive financial strategy, high leverage” and private equity ownership, with concerns about “operating underperformance” amid rising energy costs, stating it doesn’t think profits will cover its interest payments in the next two years.
