S&P cuts KUKA

S&P said it downgraded KUKA AG to BB+ from BBB-, citing the pandemic’s effects and restructuring measures.

With feeble demand for new cars, lower car production and lingering uncertainties around e-mobility, original equipment manufacturers have remained cautious on investments to protect their cash flows, resulting in lower revenue in KUKA’s systems and robotics division of more than 26% during the first nine months of 2020, S&P said. Concerning its other businesses, demand was also lower through 2020, with revenue falling 7% and 28% over the same period.

“As a result, we expect overall group revenue to decline by about 20% to about €2.6 billion in 2020 compared with 2019, and S&P Global Ratings-adjusted EBITDA margins of about 0% compared with 4.7% in 2019. We view the decline in EBITDA and EBITDA margin as high versus other capital goods and similarly rated companies,” the agency said in a press release.

However, S&P said it forecasts a gradual recovery in the group’s revenue, profitability, and credit metrics as the global economy starts recuperating.

The outlook is stable.

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