Continental Rebounds as Moody’s Raises Rating: Frankfurt Mover
Continental AG (CON), Europe’s second- largest auto-parts maker, snapped four days of losses in Frankfurt trading as Moody’s Investors Service upgraded its ratings on the company’s debt one level to Ba2 from Ba3.
Continental shares rose as much 1.8 percent and were up 1.7 percent at 77.04 euros as of 11:38 a.m. local time after retreating 9.4 percent in the first four days of trading this week. The stock has gained 60 percent this year, valuing Hanover, Germany-based Continental at 17 billion euros ($21.9 billion.)
The move reflected the “continued improvement” of Continental’s financial metrics during the course of this year and the one-level upgrade today of Continental’s major shareholder, Schaeffler AG, to a B1 corporate family rating, Moody’s said in a statement.
Continental, Europe’s second-largest tiremaker, raised its 2012 revenue and profit outlook in August after second-quarter profit jumped on lower raw material costs. Stronger earnings and a 1.1 billion-euro share sale in 2010 helped Continental reduce debt to 6.88 billion euros in June from a peak of 10.9 billion euros in 2007.
Continental’s outlook was changed to positive from stable by Moody’s, reflecting the credit rating company’s expectation that Continental “will continue to generate positive free cash flow in the coming years and apply this to debt reduction” and that operations will improve “mainly as a result of a material turnaround in the powertrain division.”
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