S&P shifts Daimler view to positive

S&P said it shifted Daimler AG’s outlook to positive from stable and affirmed its BBB+ ratings on the company and its debt.

“Premium market growth, sales mix, and cost-cutting should bolster Daimler’s profitability in the next few years. Daimler’s first-quarter 2021 EBIT margin (as adjusted by the company) of 14% in the Mercedes-Benz cars & vans division was significantly above the upper end of the company’s 8%-10% initial guidance for the division in full-year 2021, which Daimler has now raised to 10%-12%. This was primarily due to a combination of a 22% surge in retail volumes (with record growth of 60% in China), pricing, a higher value model mix, and progress with the company’s cost reduction plans,” S&P said in a press release.

The agency said it could raise Daimler’s rating in the next 12-24 months if it continues building its market position in electric vehicles, in addition to achieving an adjusted EBITDA margin comfortably above 10% and adjusted FOCF to sales above 4%, while maintaining adjusted debt to EBITDA well below 0.5x.

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