Moody's upgrades Michelin

Moody's Investors Service said it upgraded Compagnie Generale des Etablissements Michelin's long-term ratings to Baa2 from Baa3 and its short-term ratings to Prime-2 from Prime-3.

The outlook is stable.

The upgrade reflects Moody's decision to eliminate the notching for structural subordination between the ultimate parent company and its subsidiary, Moody's said.

Michelin's Baa2 long-term ratings reflect its leading positions, balanced and profitable core segments reducing earnings volatility and price position based on brand recognition and customer loyalty, the agency said.

Ratings also consider strong pricing pressure, unfavorable cost structure compared with peers, high research and development needs, and challenge to generate a positive free cash flow after dividends on a sustainable basis and reduce leverage despite high investments and challenging end markets, according to Moody's.

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