Research Update: Ford Motor Co. And Subsidiary Ratings Lowered To 'BBB-' from 'BBB' As Profitability Weakness Persists; Outlook Stable

Due to Ford Motor Co.'s ongoing subpar performance in China and Europe (roughly combined, 24% of their automotive revenue), rising regulatory costs globally, and softening industry demand, we no longer expect the company to sustain an EBITDA margin of around 8% at least until 2022. Additionally, we anticipate the company's global restructuring and cost-reduction efforts to face high execution risks amid heightened geopolitical risk and weakening consumer sentiment in many of its largest markets. We are lowering our long-term issuer credit rating on Ford and subsidiary Ford Motor Credit Co. LLC (FMCC) to 'BBB-' from 'BBB' and short-term rating to 'A-3' from 'A-2'. At the same time, we are lowering our issue-level ratings on Ford Motor Co.'s debt to 'BBB-'

...- Due to Ford Motor Co.'s ongoing subpar performance in China and Europe (roughly combined, 24% of their automotive revenue), rising regulatory costs globally, and softening industry demand, we no longer expect the company to sustain an EBITDA margin of around 8% at least until 2022. - Additionally, we anticipate the company's global restructuring and cost-reduction efforts to face high execution risks amid heightened geopolitical risk and weakening consumer sentiment in many of its largest markets. - We are lowering our long-term issuer credit rating on Ford and subsidiary Ford Motor Credit Co. LLC (FMCC) to '###-' from '###' and short-term rating to 'A-3' from 'A-2'. At the same time, we are lowering our issue-level ratings on Ford Motor Co.'s debt to '###-' from '###'. - The stable outlook reflects our view of modest improvement in profitability (EBITDA margins between 6% and 7%) relative to 2019 due to its new product rollout globally over the next 24 months and a strong liquidity position...

Research Update