S&P views Zhejiang Geely negatively

S&P said it revised the outlook for Zhejiang Geely Holding Group Co. Ltd. and its subsidiary Geely Automobile Holdings Ltd. to negative from stable.

“Increased focus on electric vehicle (EV) businesses will dent Zhejiang Geely Holding Group Co. Ltd.'s margin and profit in 2022. This, together with our proportionate consolidation of Polestar Automotive Holding UK plc–a strategic asset for the group–will lead to a debt-to-EBITDA ratio of 2.4x-2.6x in 2022, compared with 1.7x in 2021,” S&P said in a press release.

“While we anticipate margin improvement and moderating leverage in 2023, downside risk for the China-based auto manufacturer is high, given persistently high lithium battery costs and uncertainty in the execution of Polestar's EV businesses,” the agency said.

S&P also affirmed its BBB- ratings for both companies and their senior unsecured notes.

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