Daimler Outlook Revised To Negative On Weak Profitability And Cash Flow; 'A/A-1' Ratings Affirmed

On July 12, 2019, German car and truck manufacturer Daimler AG lowered its earnings guidance for 2019 by about €4 billion, or 4 percentage points, partly due to exceptional items. We now see Daimler's profitability to decline to about 6%-7%--well below our previous expectations of about 10% EBITDA margin in 2019--and believe cash flow after capital expenditure (capex) and dividends will remain negative in 2019-2020. At the same, we currently expect a margin improvement in 2020 thanks to lower exceptional items, higher margins from new product launches, and a mildly improving market environment than in 2019. We are revising our outlook on Daimler to negative from stable and affirming the 'A' long-term and 'A-1' short-term issuer credit ratings. At the

...- On July 12, 2019, German car and truck manufacturer Daimler AG lowered its earnings guidance for 2019 by about 4 billion, or 4 percentage points, partly due to exceptional items. - We now see Daimler's profitability to decline to about 6%-7%--well below our previous expectations of about 10% EBITDA margin in 2019--and believe cash flow after capital expenditure (capex) and dividends will remain negative in 2019-2020. - At the same, we currently expect a margin improvement in 2020 thanks to lower exceptional items, higher margins from new product launches, and a mildly improving market environment than in 2019. - We are revising our outlook on Daimler to negative from stable and affirming the 'A' long-term and 'A-1' short-term issuer credit ratings. At the same, we are affirming our 'A' issue-level rating on Daimler's unsecured debt. - The negative outlook reflects the one-in-three likelihood of a one-notch downgrade over the next 12 months if Daimler cannot restore its profitability to...

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