S&P revises GM outlook to stable

S&P said it revised the outlook on General Motors Co., and its subsidiary, General Motors Financial Co. Inc., to stable from negative and affirmed the BBB issuer credit ratings.

“GM will likely sustain solid EBITDA margins, despite ongoing supply chain bottlenecks and high commodity costs, due to its strong market position in North America. We now expect the company to sustain EBITDA margins of over 13% in 2021 and more than 12% in 2022 before they slightly moderate in 2023 as pricing tailwinds abate once supply normalizes,” the agency said in a press release.

The revised outlook reflects an expectation that the healthy profitability of its truck portfolio in North America (EBIT margins approaching 10%) will continue to underpin the rating, S&P said. Additionally, GM’s ongoing cost-reduction efforts and sizable cash dividends from its Chinese joint ventures will likely enable it to keep FOCF to debt in the 15%-25% range over the next two years.

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