Moody’s rates Kongsberg, notes Ba3

Moody’s Investors Service said it assigned a Ba3 corporate family rating and a Ba3-PD probability of default rating to Kongsberg Automotive ASA.

The agency also assigned a Ba3 rating to the €275 million senior secured notes due 2025 issued by Kongsberg Actuations System BV.

The outlook is stable.

Moody’s said the corporate family rating reflects well diversified end markets with 55% of sales generated with light duty vehicles, 26% heavy duty vehicles, as well as industrial, power sports and heavy equipment accounting for 9%, 7% and 3%, respectively.

The rating also reflects strong market positions in very profitable specialty products, good customer diversification and continued conservative financial policy with no intention to distribute dividends over the near to medium term, which was additionally evidenced by an equity increase in June and a rights issue in 2008 to support funding of an acquisition, the agency said.

Moody’s said the rating is constrained by the relatively small size in the context of the global automotive supplier industry, the group's currently low operating profitability, very minimal growth with a total of 5.7% since 2011 and material weakening of free cash flow generation in 2017.

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