{"id":9971,"date":"2012-04-16T16:19:16","date_gmt":"2012-04-16T14:19:16","guid":{"rendered":"http:\/\/www.myza.co.za\/04\/text-sp-ups-bmw-to-aa-1-on-improved-profitability\/"},"modified":"2012-04-16T16:19:16","modified_gmt":"2012-04-16T14:19:16","slug":"text-sp-ups-bmw-to-aa-1-on-improved-profitability","status":"publish","type":"post","link":"https:\/\/www.myza.co.za\/press\/text-sp-ups-bmw-to-aa-1-on-improved-profitability\/","title":{"rendered":"TEXT-S&P ups BMW to ‘A\/A-1’ on improved profitability"},"content":{"rendered":"

\t\t<\/span><\/p>\n

<\/span><\/p>\n

<\/span><\/p>\n

At year-end 2011, adjusted free funds from operations (FFO) to debt (adjusted
\naccording to our captive finance methodology) jumped to more than 500% from
\n230% in 2010. This arose not only from the improvement in the group’s results,
\nbut also from the twofold impact, after adjusted according to our captive
\nfinance methodology, of the acquisition of ICL (a leasing company) and a
\nchange in the company’s accounting policy for leased vehicles.<\/p>\n

<\/span><\/p>\n

In 2011, reported free operating cash generation in the industrial division
\nwas EUR3.5 billion, including EUR1.7 billion of negative working capital partly
\nbecause of higher than usual inventories needed for the launch of the new BMW
\n3 Series. For 2012, we expect BMW to be able to generate about EUR3 billion of
\nfree operating cash flow and to maintain the ratio of FFO to debt in the three
\ndigits and well above the 50%-60% target. We assume that BMW will maintain the
\ndividend distribution at about a 30% payout ratio, even though the carmarker
\ntargets a 40% payout, which it plans to gradually attain but only apply in
\ncase of an extremely solid operating performance and cash generation. We do
\nnot factor in any significant acquisitions during the year.<\/p>\n

<\/span><\/p>\n

We continue to view BMW’s business risk profile as “strong,” supported by the
\ncompany’s solid competitive position and improved profitability. We classify
\nits financial risk profile as “modest.” This is primarily due to the
\ncarmaker’s solid cash generation and the moderate financial policy that it has
\nmaintained over time.<\/p>\n

<\/span><\/p>\n

<\/span><\/p>\n

Liquidity<\/p>\n

<\/span><\/p>\n

The short-term rating on BMW is ‘A-1’. We view the company’s liquidity as
\n“strong” under our criteria. The coverage ratio of sources to uses in the next
\n12 months for the automotive division is above 2x. BMW’s financial flexibility
\nand liquidity are underpinned by:<\/p>\n

<\/span><\/p>\n

— Cash and cash equivalents of EUR5.8 billion in the industrial division
\non Dec. 31, 2011. Of this, we view EUR2 billion as necessary to maintain ongoing
\noperations and therefore exclude this amount from our calculation. Short-term
\nmaturities in the industrial division were EUR1.5 billion on the same date.<\/p>\n

<\/span><\/p>\n

— Unused group credit lines, notably a EUR6 billion committed syndicated
\nbank line that backs up a multicurrency commercial paper (CP) program due in
\n2016. This credit line is free from financial covenants and material adverse
\nchange clauses. The credit line serves as collateral for a CP program
\ncomprising a $7 billion U.S. program, a EUR5 billion European program, and a EUR2
\nbillion French program. It can also be used for general corporate purposes. By
\nDecember 2011, CP usage was more than EUR5 billion.
\n\u00a0 Continued…<\/strong><\/span><\/p>\n

<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

At year-end 2011, adjusted free funds from operations (FFO) to debt (adjusted according to our captive finance methodology) jumped to more than 500% from 230% in 2010. This arose not only from the improvement in the group’s results, but also from the twofold impact, after adjusted according to our captive finance methodology, of the acquisition […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","ngg_post_thumbnail":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[1],"tags":[830,2370,183],"class_list":{"0":"post-9971","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-south-africa","7":"tag-news","8":"tag-reuters","9":"tag-south-africa-2","10":"entry"},"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/posts\/9971","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/comments?post=9971"}],"version-history":[{"count":0,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/posts\/9971\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/media?parent=9971"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/categories?post=9971"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/tags?post=9971"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}