Moodys.com
Close
Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Already a customer?
LOG IN
Don't want to see this again?
REGISTER
OR
Accept our Terms of Use to continue to Moodys.com:

PLEASE READ AND SCROLL DOWN!

By clicking “I AGREE” [at the end of this document], you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s inform​ation that becomes accessible to you [after clicking “I AGREE”] (the “Information”).   References herein to “Moody’s” include Moody’s Corporation, Inc. and each of its subsidiaries and affiliates.

Terms of One-Time Website Use

1.            Unless you have entered into an express written contract with Moody’s to the contrary, you agree that you have no right to use the Information in a commercial or public setting and no right to copy it, save it, print it, sell it, or publish or distribute any portion of it in any form.               

2.            You acknowledge and agree that Moody’s credit ratings: (i) are current opinions of the future relative creditworthiness of securities and address no other risk; and (ii) are not statements of current or historical fact or recommendations to purchase, hold or sell particular securities.  Moody’s credit ratings and publications are not intended for retail investors, and it would be reckless and inappropriate for retail investors to use Moody’s credit ratings and publications when making an investment decision.  No warranty, express or implied, as the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any Moody’s credit rating is given or made by Moody’s in any form whatsoever.          

3.            To the extent permitted by law, Moody’s and its directors, officers, employees, representatives, licensors and suppliers disclaim liability for: (i) any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with use of the Information; and (ii) any direct or compensatory damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud or any other type of liability that by law cannot be excluded) on the part of Moody’s or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with use of the Information.

4.            You agree to read [and be bound by] the more detailed disclosures regarding Moody’s ratings and the limitations of Moody’s liability included in the Information.     

5.            You agree that any disputes relating to this agreement or your use of the Information, whether sounding in contract, tort, statute or otherwise, shall be governed by the laws of the State of New York and shall be subject to the exclusive jurisdiction of the courts of the State of New York located in the City and County of New York, Borough of Manhattan.​​​

I AGREE
Rating Action:

MOODY'S DOWNGRADES TO Baa2 CONTINENTAL'S SENIOR DEBT RATING AND CONFIRMS THE PRIME-2 RATING FOR SHORT TERM DEBT; EMTN PROGRAM NEWLY RATED; NEGATIVE OUTLOOK

05 Nov 2001
MOODY'S DOWNGRADES TO Baa2 CONTINENTAL'S SENIOR DEBT RATING AND CONFIRMS THE PRIME-2 RATING FOR SHORT TERM DEBT; EMTN PROGRAM NEWLY RATED; NEGATIVE OUTLOOK

First Time Rating For EURO 1 Billion EMTN Program

Frankfurt, November 05, 2001 -- Moody´s Investors Service today downgraded Continental AG's long-term issuer rating to Baa2 from Baa1 and confirmed the group's Prime-2 rating for short-term debt. At the same time Moody's assigned a long-term Baa2 and short-term Prime-2 rating to Continental AG's new Euro 1 Billion EMTN program. The former issuer ratings were withdrawn. The outlook for the new ratings is negative.

Moody's rating downgrade is based on the group's deteriorating operating performance in a difficult market environment at a time when its financial flexibility is reduced following debt-financed acquisitions (Temic) and the cancellation of previously intended asset disposal. In addition, declining auto production, strong competitive pressures, high R&D requirements and increased pricing demands from powerful OEM automotive customers could result in further margin erosion at least over the near term. However, the company's strategic reorientation with increased focus on cost efficiency, the initiated plant restructuring program, and debt reduction are expected to support the group's performance development during the current cyclical weakening. Additionally, the company benefits from its long-term customer relations and a more diversified product mix with a balanced exposure to the cyclical OEM automotive industry as well as the typically more stable tire replacement markets. Furthermore, the group's innovative product portfolio might help offset volume declines through increased penetration of product into new models (e.g. ESP safety features).

Continental's financial position has been weakened by the recent debt financed acquisition of Temic (60% interest for EUR 398 Mio acquired in 2001, remaining 40% for up to EUR 235 Mio expected to be purchased in 2002), the cancellation of the disposal of ContiTech as well as weakening operating results including losses at the group's US and commercial tire operations. At September 2001, net indebtedness including accounts receivable sales of approximately EUR 490 Mio amounted to EUR 3.4 billion in addition to leasing programs valued by Moody's at roughly EUR 800-1,000 Mio in comparable debt. Management's increased focus and commitment on cost cutting, working capital management and efficiency and profitability improvements is expected to stabilize negative performance trends, however, continued restructuring need and the acquisition of the remaining 40% Temic share is anticipated to delay any meaningful debt reduction into 2003 and possibly beyond. Continental benefits from long term, committed financing arrangements, which provide support during the current cyclical downturn. Nonetheless, despite only moderate refinancing needs in 2001 and 2002, an additional layer of long term financing is expected to be arranged to refinance the Temic acquisition and provide additional headroom and flexibility.

Moody's anticipates that Continental's new CEO will decisively implement new strategies to improve the company's market position in core growth areas and to increase emphasis on profitability and cash flow generation across the group including the newly added Temic operation. Large acquisitions are not expected to be part of corporate development over the short to medium term, however, strategic portfolio development might include smaller, selective acquisitions, cooperations or strategic alliances. Moody's views the shift in focus from an aggressive growth towards a more conservative, debt-reduction and cash flow oriented strategy favourable to the position of the debtholders.

Over the medium term Moody's expects the company to face a number of strategic challenges in its tire as well as its automotive parts portfolio. In addition, to optimising returns and value of its cash generative and diverse ContiTech division after the failed disposal, Continental will also have to improve its positioning and/or scale in the US tire market and European commercial tires to ensure sustainable profitability in these segments. In the passenger car segment, Continental continues to be well positioned in Europe, especially in the German market, however, weather-related volatility in its strong Winter tire business and increased competition in the attractive high-end segment with high-margin and strong loyalty, might impact profitability.

In the company's automotive systems division, sustained growth in electronic stability systems (ESP) is expected to help offset the impact of the current decline in automotive production. Nonetheless, to secure future growth and success, Continental will have to position itself at the forefront of developing innovative systems in chassis management and improving synergies between tire and electronics. Despite Continental's unique positioning combining tire and brake/electronic competence in-house, the recent strategic alliances between Bosch/Michelin and Siemens/Goodyear has created two large and financially strong groups, which are expected to increase competition and might result in increased need for R&D expenses. The growing competition may eventually also lead to more pricing power for the OEMs in this area, which in general have been trying to offload R&D expenses to their suppliers. Below-cost pricing at introduction and shortened product cycles due to the accelerating pace of innovation and commoditization have depressed margins at R&D driven automotive suppliers, as volume growth, economies of scale and cost improvements have quickly been offset by price declines reflecting the strong negotiating power of OEM customers.

The negative rating outlook reflects challenges relating to the realisation of operating improvements and cost reductions, the potential need for further restructuring measures as well as the potential for a more pronounced and severe industry downturn than usual, which might further delay a return to more conservative debt protection measures. In addition, the company remains exposed to technological innovation and R&D challenges and will need to successfully develop and integrate its product range by leveraging its core competencies in tire, chassis management and electronics while being faced with competition from financially stronger or strategically better positioned companies.

The Continental Group, headquartered in Hannover, Germany, is a leading first-tier supplier to the OEM automobile industry of brake and chassis technology and the world's fourth largest tire manufacturer with a strong position in its domestic market and in Europe. In 2000 the company generated total sales of approximately EUR 10.1 billion.

Frankfurt
Wolfgang Draack
Senior Vice President
European Corporates Group
Moody's Deutschland GmbH
+49 69 707 30 700

Frankfurt
Renate Labak
Vice President - Senior Analyst
European Corporates Group
Moody's Deutschland GmbH
+49 69 707 30 700

No Related Data.
© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’S OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

MOODY’S CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS OR MOODY’S PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.

CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.

All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing the Moody’s publications.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.

Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any rating, agreed to pay to Moody’s Investors Service, Inc. for ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

​​​​​​
Moodys.com