S&P shifts Michelin view to stable

S&P said it shifted Compagnie Generale des Etablissements Michelin SCA’s outlook to stable from negative and affirmed its A- ratings.

“Michelin’s financial results are likely to be stronger than previously expected, leading to resilient credit metrics for 2020. S&P Global Ratings has revised upward its forecast for Michelin’s profitability and cash flow in 2020. We anticipate that Michelin will post an S&P Global Ratings-adjusted EBITDA margin of 15%-17% this year,” S&P said in a press release.

Though this range is lower than the 2019 result, the agency noted the range is higher than its adjusted EBITDA-margin forecast of 12%-14% in May.

“We expect Michelin to build more rating headroom in 2021-2022, as credit metrics surpass 2019 in 2022. Our macroeconomic forecasts currently point to a global rebound in real GDP of 4%-5% a year in 2021-2022, after a deep recession in 2020,” S&P said.

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