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waltermasoni
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Rating Action:
Moody's downgrades JLR to Ba2; stable outlook
12 Jul 2018
Frankfurt am Main, July 12, 2018 -- Moody's Investors Service, ("Moody's") has today downgraded Jaguar Land Rover Automotive Plc's (JLR) corporate family rating (CFR) to Ba2 from Ba1 and its probability of default ratings to Ba2-PD from Ba1-PD as well as all senior unsecured instrument ratings to Ba2 from Ba1. The outlook is stable.
"The downgrade to Ba2 reflects JLR's continued deterioration in its key credit metrics over the past three years and Moody's expectation that a material improvement over the next two years is rather unlikely given JLR's continued high investment needs against the backdrop of a more challenging environment with rising competitive pressure," says Falk Frey, a Senior Vice President and lead analyst for JLR.
RATINGS RATIONALE
Most of JLR's key financials have continuously deteriorated e.g. Moody's calculates an EBITA margin decline to 3.8% in FY2018 (ended 31 March 2018) from 4.4% in the previous year, 5.6% in FY2016 and down from its peak of 11.1% in FY2014. The decline in profitability - together with a continued rise in capital expenditures - also impacted JLR's free cash flow generation (as adjusted by Moody's) that turned to a negative GBP135 million in FY2017 with an approximately GBP1.2 billion cash consumption in FY2018.
In contrast to this downward trend in credit metrics most other European manufacturers, including Volvo Car AB (Ba1 stable), Peugeot S.A. (Ba1 stable) and Fiat Chrysler Automobiles N.V. (Ba2 stable) have demonstrated a positive trend in their credit metrics. Consequently, JLR's credit metrics are no longer in line with the Ba1 rating category.
There are a number of factors that help to explain JLR's performance trend e.g. compared with other OEMs a higher reliance on the UK market (18% of JLR's retail sales in FY2018) which is experiencing a cyclical weakness in addition to the uncertainties around the consequences of Brexit, a sharp decline in diesel sales with JLR being overly exposed to compared to other OEMs. Also, continuing high incentives especially in the US (North America represents 21% of JLR's retail sales) as well as the steady increase in investments for widening the product range, alternative fuel vehicles, autonomous vehicles and the new plant in Slovakia negatively impacted profits and cash flow generation.
Although, JLR has initiated cost efficiency measures in various areas of the business Moody's caution that those initiatives will result in a significant improvement in JLR's financials in the next two to three years given the continued rise in investments announced, a higher dividend payout, higher raw material prices as well as a potential rise in US tariffs for imported vehicles. Thus, Moody's anticipates further negative free cash flow generation in the current year and the following financial year and only modest improvement in JLR's profitability over the next two years.
A disorderly Brexit scenario would have additional negative effects on JLR's performance, driven by expected disruptions of its supply chain, and the risk of tariffs being imposed by the EU for exports from outside the EU. Should an unorderly Brexit materialize, this would put additional pressure on the Ba2 rating of JLR.
LIQUIDITY
JLR's liquidity profile as of 30 March 2018 is deemed as good. We expect the company will have sufficient cash sources, comprising readily available cash, funds from operations and undrawn committed credit lines to cover its cash uses over the next 12-18 months, including a further increase in capex, debt repayments, cash for day-to-day operations, working capital and dividend payments. JLR has access to its GBP1,935 million revolving credit facility due in July 2022 (undrawn as of 30 March 2018) with no financial covenants.
RATING OUTLOOK
The stable outlook reflects Moody's expectation that JLR will be able to stop the erosion in profitability and financial metrics in its current fiscal year 2019 despite a further increase in investments based on the successful new model launches and full year availability of recent model introductions as well as the initiatives taken to generate cost efficiencies.
The stable outlook also assumes that JLR will be able to weather the challenging landscape as a result of heavy investment requirements for (1) alternative propulsion technologies; (2) autonomous driving; (3) the shift of production capacities towards alternative fuel vehicles; (4) connectivity; as well as (5) regulations relating to vehicle safety, emission
Moody's downgrades JLR to Ba2; stable outlook
12 Jul 2018
Frankfurt am Main, July 12, 2018 -- Moody's Investors Service, ("Moody's") has today downgraded Jaguar Land Rover Automotive Plc's (JLR) corporate family rating (CFR) to Ba2 from Ba1 and its probability of default ratings to Ba2-PD from Ba1-PD as well as all senior unsecured instrument ratings to Ba2 from Ba1. The outlook is stable.
"The downgrade to Ba2 reflects JLR's continued deterioration in its key credit metrics over the past three years and Moody's expectation that a material improvement over the next two years is rather unlikely given JLR's continued high investment needs against the backdrop of a more challenging environment with rising competitive pressure," says Falk Frey, a Senior Vice President and lead analyst for JLR.
RATINGS RATIONALE
Most of JLR's key financials have continuously deteriorated e.g. Moody's calculates an EBITA margin decline to 3.8% in FY2018 (ended 31 March 2018) from 4.4% in the previous year, 5.6% in FY2016 and down from its peak of 11.1% in FY2014. The decline in profitability - together with a continued rise in capital expenditures - also impacted JLR's free cash flow generation (as adjusted by Moody's) that turned to a negative GBP135 million in FY2017 with an approximately GBP1.2 billion cash consumption in FY2018.
In contrast to this downward trend in credit metrics most other European manufacturers, including Volvo Car AB (Ba1 stable), Peugeot S.A. (Ba1 stable) and Fiat Chrysler Automobiles N.V. (Ba2 stable) have demonstrated a positive trend in their credit metrics. Consequently, JLR's credit metrics are no longer in line with the Ba1 rating category.
There are a number of factors that help to explain JLR's performance trend e.g. compared with other OEMs a higher reliance on the UK market (18% of JLR's retail sales in FY2018) which is experiencing a cyclical weakness in addition to the uncertainties around the consequences of Brexit, a sharp decline in diesel sales with JLR being overly exposed to compared to other OEMs. Also, continuing high incentives especially in the US (North America represents 21% of JLR's retail sales) as well as the steady increase in investments for widening the product range, alternative fuel vehicles, autonomous vehicles and the new plant in Slovakia negatively impacted profits and cash flow generation.
Although, JLR has initiated cost efficiency measures in various areas of the business Moody's caution that those initiatives will result in a significant improvement in JLR's financials in the next two to three years given the continued rise in investments announced, a higher dividend payout, higher raw material prices as well as a potential rise in US tariffs for imported vehicles. Thus, Moody's anticipates further negative free cash flow generation in the current year and the following financial year and only modest improvement in JLR's profitability over the next two years.
A disorderly Brexit scenario would have additional negative effects on JLR's performance, driven by expected disruptions of its supply chain, and the risk of tariffs being imposed by the EU for exports from outside the EU. Should an unorderly Brexit materialize, this would put additional pressure on the Ba2 rating of JLR.
LIQUIDITY
JLR's liquidity profile as of 30 March 2018 is deemed as good. We expect the company will have sufficient cash sources, comprising readily available cash, funds from operations and undrawn committed credit lines to cover its cash uses over the next 12-18 months, including a further increase in capex, debt repayments, cash for day-to-day operations, working capital and dividend payments. JLR has access to its GBP1,935 million revolving credit facility due in July 2022 (undrawn as of 30 March 2018) with no financial covenants.
RATING OUTLOOK
The stable outlook reflects Moody's expectation that JLR will be able to stop the erosion in profitability and financial metrics in its current fiscal year 2019 despite a further increase in investments based on the successful new model launches and full year availability of recent model introductions as well as the initiatives taken to generate cost efficiencies.
The stable outlook also assumes that JLR will be able to weather the challenging landscape as a result of heavy investment requirements for (1) alternative propulsion technologies; (2) autonomous driving; (3) the shift of production capacities towards alternative fuel vehicles; (4) connectivity; as well as (5) regulations relating to vehicle safety, emission
waltermasoni
Caribbean Trader
waltermasoni
Caribbean Trader
ArcelorMittal S.A.
Fitch Upgrades ArcelorMittal's IDR to 'BBB-'; Outlook Stable
13 JUL 2018 6:51 AM ET
Fitch Ratings-London-13 July 2018: Fitch Ratings has upgraded ArcelorMittal S.A.'s (AM) Long-Term Issuer Default Rating (IDR) and senior unsecured ratings to 'BBB-' from 'BB+'. The Outlook on the Long-term IDR is Stable. The Short-Term IDR and the CP programme have been upgraded to 'F3' from 'B'.
The rating upgrade of AM reflects its improving balance sheet, its publicly stated commitment to debt reduction and successful cost optimisation measures. Recovery in global steel markets driven by supply-side reforms in China and stronger demand for steel has also been supporting operating performance. Fitch expects that funds from operations (FFO) adjusted gross leverage will remain below our guidance for the 'BBB-' rating of 3.0x over the next three years, even though we assume that steel prices will moderate from end-2018. Under Fitch's base case AM will generate over USD2 billion free cash flow (FCF) per annum after paying for increased capex and dividends. We expect Fitch-adjusted gross debt to be reduced by around USD2.25 billion by end-2020 (currently USD22.1 billion).
KEY RATING DRIVERS
On-going Debt Reduction: AM has publicly announced its commitment to reduce net debt to USD6 billion (before Fitch adjustments) to sustain healthy financial metrics through the steel industry cycle. Since 2016 the company has paid down a substantial USD7.5 billion and is set to prioritise debt repayment over shareholder returns until the net debt target is reached. Fitch expects that the company will reduce Fitch-adjusted gross debt by another USD2.25 billion by end-2020, underpinned by robust cash flow generation.
Investment-Grade Credit Metrics: AM has reduced FFO adjusted gross leverage to 2.9x at end-2017 and achieved a material improvement in EBITDA. Fitch expects that the combination of stronger operating performance, debt reduction and a supportive global steel market will enable AM to sustain investment grade metrics through the forecast period of 2018 - 2021. Fitch projects EBITDA to be slightly in excess of USD10billion in 2018 and USD9 billion in 2019. We estimate that annual FCF of over USD2 billion per annum will be sufficient to pay down debt, start dividend distributions and finance acquisitions. Fitch expects that AM is likely to achieve its USD6billion net debt target in 2019. FFO adjusted gross leverage is forecast by Fitch to gradually decline towards 2.5x in 2020.
Steel Sector Outlook Positive: Fitch maintains its positive sector outlook for steel industry in 2018 as capacity closures and extended output restrictions in China will continue to have a positive impact on the global steel market through improved market balance and product prices. We expect that global apparent steel demand will be positive across most AM's main markets. We project that steel shipments of AM in 2018 will rise to 87 million tonnes (mt). In Europe demand is driven by all key steel consuming sectors - construction, mechanical engineering and automotive, and in North America by automotive and non-residential construction.
Moderate Leverage Impact from Essar: The possible acquisition of the fourth-largest Indian steel player Essar Steel would moderately enhance AM's operating profile, giving AM a foothold in a market with promising growth prospects. AM has entered into a joint venture with Nippon Steel & Sumitomo Metal to acquire and manage Essar. Fitch estimates the total transaction value at around USD6 billion-USD7 billion; terms of the bid have not been disclosed. In our base case we conservatively add to debt USD4 billion related to the acquisition, net of disposal of available-for-sale assets, which results in FFO adjusted gross leverage remaining within our guidance.
Ilva Deal a Priority in Europe: We believe the acquisition of Ilva will provide additional strength to AM's European franchise, even though antitrust concerns led to the requirement to dispose of various flat steel assets, mostly located in eastern Europe. In the first two years post acquisition Ilva would slightly reduce operating margins of AM in Europe, but from year three we expect a positive earnings contribution. We add a EUR1.8 billion transaction amount to AM's debt, reduced by remedy asset sale, and assume repayment as per the announced schedule. With investment in a new Mexican hot-strip mill we estimate that AM's capex will peak at USD3.8 billion-USD3.9 billion over the next two years.
Steel Price Moderation: Apart from the supply and demand balance for steel, raw materials will be the main driver of prices. Fitch expects a moderation in iron ore and coking coal prices over the medium-term as new capacities come on-stream. Therefore, we expect some softening in steel prices towards 2019. At the same time, protectionist tariffs in the US and anti-dumping measures in Europe could provide support for domestic steel prices.
Significant Scale and Diversification: The ratings reflect AM's position as the world's largest steel producer. AM is also the world's most diversified steel producer by product type and geography, and benefits from a solid (over 50%) and increasing level of vertical integration into iron ore.
Mid-Point Cost Position: Fitch estimates that AM has an average cost position (higher second quartile) overall, varying across the main regions in which it operates. The cost positions of individual plants differ significantly, with those in the US and Europe generally operating at higher costs, whereas the Brazilian and South African plants are generally lower-cost. Management implements cost-savings programmes, including Action 2020 aimed at USD3 billion cost reductions over five years, of which half has been achieved, but we do not expect any short-term material shift in the company's cost position.
Fitch Upgrades ArcelorMittal's IDR to 'BBB-'; Outlook Stable
13 JUL 2018 6:51 AM ET
Fitch Ratings-London-13 July 2018: Fitch Ratings has upgraded ArcelorMittal S.A.'s (AM) Long-Term Issuer Default Rating (IDR) and senior unsecured ratings to 'BBB-' from 'BB+'. The Outlook on the Long-term IDR is Stable. The Short-Term IDR and the CP programme have been upgraded to 'F3' from 'B'.
The rating upgrade of AM reflects its improving balance sheet, its publicly stated commitment to debt reduction and successful cost optimisation measures. Recovery in global steel markets driven by supply-side reforms in China and stronger demand for steel has also been supporting operating performance. Fitch expects that funds from operations (FFO) adjusted gross leverage will remain below our guidance for the 'BBB-' rating of 3.0x over the next three years, even though we assume that steel prices will moderate from end-2018. Under Fitch's base case AM will generate over USD2 billion free cash flow (FCF) per annum after paying for increased capex and dividends. We expect Fitch-adjusted gross debt to be reduced by around USD2.25 billion by end-2020 (currently USD22.1 billion).
KEY RATING DRIVERS
On-going Debt Reduction: AM has publicly announced its commitment to reduce net debt to USD6 billion (before Fitch adjustments) to sustain healthy financial metrics through the steel industry cycle. Since 2016 the company has paid down a substantial USD7.5 billion and is set to prioritise debt repayment over shareholder returns until the net debt target is reached. Fitch expects that the company will reduce Fitch-adjusted gross debt by another USD2.25 billion by end-2020, underpinned by robust cash flow generation.
Investment-Grade Credit Metrics: AM has reduced FFO adjusted gross leverage to 2.9x at end-2017 and achieved a material improvement in EBITDA. Fitch expects that the combination of stronger operating performance, debt reduction and a supportive global steel market will enable AM to sustain investment grade metrics through the forecast period of 2018 - 2021. Fitch projects EBITDA to be slightly in excess of USD10billion in 2018 and USD9 billion in 2019. We estimate that annual FCF of over USD2 billion per annum will be sufficient to pay down debt, start dividend distributions and finance acquisitions. Fitch expects that AM is likely to achieve its USD6billion net debt target in 2019. FFO adjusted gross leverage is forecast by Fitch to gradually decline towards 2.5x in 2020.
Steel Sector Outlook Positive: Fitch maintains its positive sector outlook for steel industry in 2018 as capacity closures and extended output restrictions in China will continue to have a positive impact on the global steel market through improved market balance and product prices. We expect that global apparent steel demand will be positive across most AM's main markets. We project that steel shipments of AM in 2018 will rise to 87 million tonnes (mt). In Europe demand is driven by all key steel consuming sectors - construction, mechanical engineering and automotive, and in North America by automotive and non-residential construction.
Moderate Leverage Impact from Essar: The possible acquisition of the fourth-largest Indian steel player Essar Steel would moderately enhance AM's operating profile, giving AM a foothold in a market with promising growth prospects. AM has entered into a joint venture with Nippon Steel & Sumitomo Metal to acquire and manage Essar. Fitch estimates the total transaction value at around USD6 billion-USD7 billion; terms of the bid have not been disclosed. In our base case we conservatively add to debt USD4 billion related to the acquisition, net of disposal of available-for-sale assets, which results in FFO adjusted gross leverage remaining within our guidance.
Ilva Deal a Priority in Europe: We believe the acquisition of Ilva will provide additional strength to AM's European franchise, even though antitrust concerns led to the requirement to dispose of various flat steel assets, mostly located in eastern Europe. In the first two years post acquisition Ilva would slightly reduce operating margins of AM in Europe, but from year three we expect a positive earnings contribution. We add a EUR1.8 billion transaction amount to AM's debt, reduced by remedy asset sale, and assume repayment as per the announced schedule. With investment in a new Mexican hot-strip mill we estimate that AM's capex will peak at USD3.8 billion-USD3.9 billion over the next two years.
Steel Price Moderation: Apart from the supply and demand balance for steel, raw materials will be the main driver of prices. Fitch expects a moderation in iron ore and coking coal prices over the medium-term as new capacities come on-stream. Therefore, we expect some softening in steel prices towards 2019. At the same time, protectionist tariffs in the US and anti-dumping measures in Europe could provide support for domestic steel prices.
Significant Scale and Diversification: The ratings reflect AM's position as the world's largest steel producer. AM is also the world's most diversified steel producer by product type and geography, and benefits from a solid (over 50%) and increasing level of vertical integration into iron ore.
Mid-Point Cost Position: Fitch estimates that AM has an average cost position (higher second quartile) overall, varying across the main regions in which it operates. The cost positions of individual plants differ significantly, with those in the US and Europe generally operating at higher costs, whereas the Brazilian and South African plants are generally lower-cost. Management implements cost-savings programmes, including Action 2020 aimed at USD3 billion cost reductions over five years, of which half has been achieved, but we do not expect any short-term material shift in the company's cost position.
waltermasoni
Caribbean Trader
Fitch Affirms Michelin at 'A-'; Outlook Stable
13 JUL 2018 10:44 AM ET
Fitch Ratings-Barcelona/Paris/London-13 July 2018: Fitch Ratings has affirmed Compagnie Generale des Etablissements Michelin's (Michelin) and Compagnie Financiere Michelin SCmA's (CFM) Long-Term Issuer Default Ratings (IDRs) at 'A-'. The Outlooks on the IDRs are Stable.
Fitch has also assigned a long-term senior unsecured rating of 'A-' to Michelin's issue of USD600 milion zero coupon cash-settled convertible bonds due 2023.
The long-term senior unsecured ratings of Michelin, CFM and Michelin Luxembourg SCS are affirmed at 'A-'. CFM is the group's finance arm and the intermediate holding entity for Michelin's non-domestic operations. Fitch has also affirmed Michelin's and CFM's Short-Term IDRs as well as Michelin's and Michelin Luxembourg SCS's short-term debt at 'F2'.
The ratings reflect Michelin's solid and defensive business profile and Fitch's expectations that the group's financial metrics will improve in the foreseeable future. The acquisitions announced in 2018 will stretch credit ratios, including leverage increasing above Fitch's negative rating guideline at end-2018.
However, Fitch believes that the deterioration will only be temporary and projects a rapid return of credit metrics to levels more commensurate with the ratings due to the group's solid cash generation. We also believe that the transitory weakening of the financial structure is offset by Michelin's excellent integration track record and our view that these acquisitions will reinforce the group's positioning and business profile.
13 JUL 2018 10:44 AM ET
Fitch Ratings-Barcelona/Paris/London-13 July 2018: Fitch Ratings has affirmed Compagnie Generale des Etablissements Michelin's (Michelin) and Compagnie Financiere Michelin SCmA's (CFM) Long-Term Issuer Default Ratings (IDRs) at 'A-'. The Outlooks on the IDRs are Stable.
Fitch has also assigned a long-term senior unsecured rating of 'A-' to Michelin's issue of USD600 milion zero coupon cash-settled convertible bonds due 2023.
The long-term senior unsecured ratings of Michelin, CFM and Michelin Luxembourg SCS are affirmed at 'A-'. CFM is the group's finance arm and the intermediate holding entity for Michelin's non-domestic operations. Fitch has also affirmed Michelin's and CFM's Short-Term IDRs as well as Michelin's and Michelin Luxembourg SCS's short-term debt at 'F2'.
The ratings reflect Michelin's solid and defensive business profile and Fitch's expectations that the group's financial metrics will improve in the foreseeable future. The acquisitions announced in 2018 will stretch credit ratios, including leverage increasing above Fitch's negative rating guideline at end-2018.
However, Fitch believes that the deterioration will only be temporary and projects a rapid return of credit metrics to levels more commensurate with the ratings due to the group's solid cash generation. We also believe that the transitory weakening of the financial structure is offset by Michelin's excellent integration track record and our view that these acquisitions will reinforce the group's positioning and business profile.
waltermasoni
Caribbean Trader
waltermasoni
Caribbean Trader
Tlx 2 nuovi bond banca imi
https://www.eurotlx.com/sites/defau...- Ammissione e Avvio Strumenti Finanziari.xls
https://www.eurotlx.com/sites/defau...- Ammissione e Avvio Strumenti Finanziari.xls