S&P changes Valeo outlook to negative

S&P said it changed its outlook for Valeo SE to negative from stable and affirmed its BB+ ratings on the company and its senior unsecured notes.

“We expect Valeo's FOCF will remain weak for the BB+ rating in 2024, and any further delay in its 2025 financial roadmap would likely pressure the rating. We anticipate the group's adjusted FOCF will decline to about €150 million-€200 million in 2024 from €201 million in 2023. This is mainly due to higher R&D and capex investments, as well as restructuring costs of about €150 million linked to the merger of its powertrain and thermal systems business units and other operating initiatives,” the agency said in a press release.

S&P said it estimates Valeo’s FOCF to debt will remain well below 5% in 2024, after the 3.8% and 3.6% recorded in 2023 and 2022, respectively.

However, FOCF is expected to climb to at least $300 million in 2025 and adjusted EBITDA margins and FOCF to debt to improve to 9%-10.5% and 6%-11% in 2025, respectively.

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