DBRS changes Volvo view to negative

DBRS said it confirmed AB Volvo’s issuer rating and senior debt rating at BBB (high) and changed the trend to negative from stable.

The agency said that the company’s earnings performance has improved over the 12 months ended June 30 but that the improvement has been less than anticipated by DBRS primarily due to ongoing weakness across several major construction equipment markets. The lackluster earnings recovery has also been exacerbated by substantial working capital absorption, which has resulted in negative free cash flow generation through the first half of this year, DBRS said. If negative free cash persists over the near term, the agency will likely downgrade the ratings.

In the meanwhile, the BBB (high) ratings reflect the company’s solid business profile, the agency said.

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