Moody’s upgrades Knorr-Bremse to A2

Moody's Investors Service said it upgraded Knorr-Bremse AG's long-term issuer rating to A2 from A3 and changed the outlook to stable from positive.

"The rating upgrade was triggered by further improvements in the company's business and competitive position on the back of growth and market share gains in both its train and truck division, which supported continued strong financial performance over the last five years. Moody's expects the company to continue its path of growth while protecting conservative credit metrics in line with the A2 rating category on the back of positive long-term market fundamentals in particular in the group's train division," Oliver Giani, Moody's lead analyst for the European automotive supplier sector, said in a news release.

"In addition, Moody's takes comfort from the company's good track record in supporting growth by bolt-on acquisitions, which help to gradually broaden the company's product range and thus assist to further strengthen its market position. The current net cash position of the group, which results from strong profitability and in turn free cash flow generation, leaves sizeable headroom within the A2 rating and alleviates concerns regarding a material weakening of the financial strength as result of M&A activity."

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