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Fitch changes Peugeot's outlook to positive

Fitch Ratings revised the outlooks of French automaker Peugeot SA, or PSA, and its subsidiary GIE PSA Tresorerie to positive and affirmed the companies' long-term issuer default ratings at BB+.

The rating agency said the revision reflects the French automaker's strong 2017 results, including the consolidation of loss-making Opel.

"Increased confidence in the next 12 to18 months that PSA can successfully manage the Opel integration without sustainably and materially hurting its profitability and [free cash flow] generation could lead to an upgrade," Fitch said.

The company's business profile is weaker than that of its investment grade peers, but its strengthening financial profile since 2014 has mitigated that deficiency, Fitch noted.

The rating agency added that PSA's improved cost structure puts the company in a better position to face the next cyclical slowdown in its main European market. "The group has demonstrated in 2017 its ability to further increase its core automotive profitability despite facing challenging conditions in some markets."

Fitch also cited its projections that credit metrics will remain in line with a low investment-grade rating.