Moody's turns Continental view to stable

Moody's Investors Service said it changed Continental AG's outlook to stable from negative and affirmed its Baa2 long-term issuer ratings, the Baa2 senior unsecured ratings and the (P)Baa2 senior unsecured medium-term notes program rating.

Moody's further affirmed the (P)Baa2 backed senior unsecured MTN program rating and the Baa2 backed senior unsecured rating of Conti-Gummi Finance BV. Concurrently, agency affirmed the (P)Baa2 backed senior unsecured MTN program rating of Continental Rubber of America, Corp. It also revised the outlooks for the subsidiaries to stable from negative.

"The stabilization of the outlook reflects our expectation that Continental's operating performance will noticeably recover over the next quarters following the recent slowdown caused by rising cost inflation, supply shortages and Covid-19 induced lockdown measures, which hampered car production in the first half of 2022," said Goetz Grossmann, a Moody's vice president, senior analyst and lead analyst for Continental, in a press release.

"While most credit metrics remain currently weak for the Baa2 rating, expected further price increases to offset cost inflation and benefits from restructuring should yield a visible recovery in Continental's profitability, leverage and cash flow metrics over the next 12-18 months, even in a weaker macroeconomic environment," Grossmann added.

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