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S&P revises VW view to stable
S&P said it revised Volkswagen AGs outlook to stable from negative and affirmed its BBB+ rating.
Concurrently, the agency changed the outlook on Volkswagen Financial Services AG to stable from negative and affirmed the BBB+ rating and the BBB- rating on VW's junior subordinate hybrid instruments.
Auto industry growth in China and the U.S. is exceeding our expectations. VW reported stronger-than-expected industrial free cash flow with about 7 billion in 2020, and we expect this to continue to increase toward 8 billion-9 billion in 2021 and to 10-11 billion in our revised base case, respectively. The group is benefiting from the strong market recovery, particularly in China and the U.S., as well as from strong pricing and positive mix effects thanks to very low inventory levels achieved throughout the industry as of year-end 2020, S&P said in a press release.
The outlook indicates an expectation the group to post adjusted free operating cash flow (FOCF) to sales hovering at 4%-5% over 2021-2023, the agency said.
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