Doosan Bobcat Inc.

The stable outlook on Bobcat reflects our expectation that the company's well-established market position and good cash flows will help it to maintain its financial metrics over the next one to two years. Still, we expect the company to remain exposed to cyclical demand for construction equipment. The rating on Bobcat could come under pressure if we lower the GCP of the DI group, potentially due to weakening liquidity. We could also lower the rating if we see a higher possibility of increased control or negative intervention by DI in Bobcat. We may also lower the rating if we revise downward the SACP for Bobcat to 'bb-' or below as a result of a significant deterioration in profitability and financial

...Steady operating performance and recent voluntary debt repayments will support Doosan Bobcat Inc.'s robust financial metrics over the next two years. Bobcat's good position in the compact construction equipment market in North America will help the company to continue to reap benefits from healthy construction activity in the U.S. and generate stable earnings over the next two years. Steady earnings, together with recent debt repayments of US$250 million, will help the company sustain its robust financial metrics over the same period, in our view. We estimate Bobcat's ratio of debt to EBITDA will remain sound at 1.0x-2.0x over the next one to two years, similar to 1.6x in 2018....

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