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S&P assigns Peugeot BBB- rating with stable outlook

S&P Global Ratings on Dec. 17 assigned French carmaker Peugeot SA a BBB- long-term issuer rating with a stable outlook, citing the company's lean cost structure and operating model.

Despite weakened automotive markets in 2018, trade tensions in the U.S. and China and a new emission standard testing procedure in Europe, the carmaker reported no headwinds on its deliveries.

Peugeot's cost strategy allowed it to deliver healthy operating margins across its Peugeot, DS, Opel Automobile GmbH and Citroën Sverige AB brands in 2018, according to the rating agency. The company also increased its market share in Europe to 17.1% in October 2018 from 15% in December 2017.

S&P Global Ratings expects the group to post adjusted EBITDA margins, including restructuring charges, in excess of 8%, along with annual free cash flow of 2%-3% of its consolidated revenues over the 2018-2020 period. The carmaker is expected to remain competitive despite the expected low growth environment in Europe and China in 2019-2020, which together accounted for just under 90% of worldwide units sold from January to October 2018.

In November, Fitch upgraded Peugeot's long-term issuer default ratings to BBB- from BB+, citing the continuous improvement in the French carmaker's financial profile.