German Auto Supplier Schaeffler Upgraded To 'BBB-' On Solid Credit Metrics And Financial Flexibility; Outlook Stable

We expect IHO group, which includes Schaeffler AG and its holding companies, will continue to generate solid credit metrics, with funds from operations (FFO) to debt at 25%-30% in 2018-2020 (26% in 2017) supported by a financial policy targeting further deleveraging. Given IHO group's financial flexibility from its stake in Continental AG currently worth more than €14 billion, we now view FFO to debt of around 25% (compared with 30% previously) as commensurate with a 'BBB-' rating. Therefore we are raising our ratings on Schaeffler AG and holding company IHO Verwaltungs GmbH to 'BBB-' from 'BB+'. The stable outlook reflects our expectation that the group's revenues will increase by around 4% annually in 2018 to 2020, with adjusted EBITDA margins

...+ We expect IHO group, which includes Schaeffler AG and its holding companies, will continue to generate solid credit metrics, with funds from operations (FFO) to debt at 25%-30% in 2018-2020 (26% in 2017) supported by a financial policy targeting further deleveraging. + Given IHO group's financial flexibility from its stake in Continental AG currently worth more than 14 billion, we now view FFO to debt of around 25% (compared with 30% previously) as commensurate with a '###-' rating. + Therefore we are raising our ratings on Schaeffler AG and holding company IHO Verwaltungs GmbH to '###-' from '##+'. + The stable outlook reflects our expectation that the group's revenues will increase by around 4% annually in 2018 to 2020, with adjusted EBITDA margins at 16%-17%, and that IHO group will maintain credit metrics in line with the ratings. FRANKFURT (S&P Global Ratings) Aug. 30, 2018--S&P Global Ratings today raised its long-term issuer credit ratings on Germany-based automotive component...

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