Moody's changes Gestamp view to positive

Moody's Investors Service said it changed to positive from stable the outlook for Gestamp Automocion, SA and affirmed the group's Ba3 long-term corporate family rating, the Ba3-PD probability of default rating and the Ba3 rating on its €400 million of backed senior secured notes due 2026.

“The ratings affirmation and change in outlook to positive from stable was prompted by Gestamp's reported strong organic top-line and profit growth and improved cash generation in the first half of 2023 (H1-2023). While reported net sales increased by almost 29% year-over-year (yoy), outperforming global light vehicle production by 13 percentage points (at constant foreign currencies and perimeter), Gestamp's reported EBITDA rose to €700 million (+26% yoy), yielding a stable 11.2% margin, after improving sequentially to 11.6% in Q2-2023 from 10.7% in Q1-23.

“Thanks to the earnings growth and partial reversal of a significant working capital build-up in Q1-2023, Gestamp's reported free cash flow (FCF) turned positive to €30 million in H1-2023 (€22 million in the prior year), albeit its Moody's-adjusted FCF (after dividends, lease payments and change in factored receivables) remained negative at around €70 million,” Moody’s said in a press release.

The agency also noted Gestamp lowered its Moody's-adjusted debt/EBITDA for the last 12 months ended June 2023 to 3.3x from 4.2x at the end of 2022.

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