Moody’s shifts Dometic view to stable

Moody’s Investors Service said it changed the outlook on Dometic Group AB’s to stable from negative. Concurrently, Moody’s affirmed Dometic’s Ba2 corporate family rating, its Ba2-PD probability of default rating and its Ba2 senior unsecured euro medium-term notes rating.

“Today’s rating action is driven by the expectation of a continued recovery of Dometic’s key credit metrics following a trough in the second quarter of 2020. Although the short-term impact from the Covid-19 pandemic was material in terms of organic growth and profitability, the company’s most important customers, such as producers of recreational vehicles, motorboats and trucks have shown strong signs of recovery, which Moody’s believes will persist at least during 2021,” the agency said in a press release.

The change in outlook is based on the Dometic reaching key credit metrics commensurate with the Ba2 rating within the next 18 months, including a debt/EBITDA ratio of below 4x and a high single-digit free cash flow /debt ratio.

“Although Moody’s expects credit ratios to remain somewhat weak for the assigned rating in our forward view, this is mitigated by the company’s good liquidity and profitability returning to pre-covid levels already in 2021,” the agency said.

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