Moody’s Investors Service, the credit rating agency of Moody's Corporation (MCO), has reaffirmed the credit rating of General Motors Company (GM) at Ba1, citing the company’s outlook to be positive.
The agency is confident about the company’s competitive business model in North America, better cost structure, improved lineups and strong market position in Asia. As a result, it is looking forward to upgrade GM to investment grade credit rating within a year.
Recently, Moody’s raised the senior unsecured ratings of Ford Motor Co. (F) to Baa3 from Ba2 and of its financial arm Ford Credit to Baa3 from Ba1, as well as dropped its speculative grade liquidity rating on the company. The agency left unchanged its “stable” rating outlook for the company and its financial arm.
The upgrade was driven by the Ford’s strong market position and higher profitability in North America, high cash balance, ability to match production with market demand and sound operating and financial management.
With securing investment grade ratings from two of the three main agencies (Moody’s and Fitch), Ford succeeded in reclaiming its collateral for $23.5 billion loan, including the blue oval logo that is embossed on its vehicles.
GM, a Zacks #3 Rank (Hold) company, reported a $100 million fall in profits to $1.6 billion in the first quarter of 2012 from $1.7 billion in the same quarter of 2011, before special items, due to lower profits from its European operations.
On per share basis, adjusted profits were 93 cents during the quarter, down 2 cents from the first quarter of 2011. However, it exceeded the Zacks Consensus Estimate of 84 cents. Adjusted earnings before interest and taxes (EBIT) dipped to $2.2 billion in the quarter from $2.0 billion in the year-ago quarter.
Revenues in the quarter went up 4% to $37.8 billion on a 3% rise in unit sales to 2.3 million vehicles globally. It was higher than the Zacks Consensus Estimate of $36.4 billion. The automaker occupied a worldwide market share of 11.3% during the quarter, compared with 11.4% a year-ago.
Based on the improved macroeconomic conditions in the U.S. and pent-up demand in the automotive sector, GM expects light vehicle sales in the range of 14.0 million–14.5 million in the U.S. during 2012. This compared with the prior guidance of 13.5 million–14.0 million units. The automaker is gearing up for 20 major vehicle launches in 2012 across the globe in order to drive sales and revenues.
FORD MOTOR CO (F): Free Stock Analysis Report
GENERAL MOTORS (GM): Free Stock Analysis Report
MOODYS CORP (MCO): Free Stock Analysis Report
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