S&P sees U.S. auto suppliers' growth slowing

Theresa Clift

Published: September 26, 2012 6:00 am ET

Related to this story

Topics Automotive

DETROIT (Sept. 26, 11:45 a.m. ET) — Standard & Poor’s expects earnings growth to slow at U.S. auto suppliers the rest of the year and into 2013, but most should not suffer credit quality downgrades because of it.

The lag in earnings will be caused by overseas business risks, the corporate credit ratings agency said.

“Following the Great Recession, these companies benefited from higher auto production after the multidecade lows of late 2008 and early 2009,” S&P credit analyst Nishit Madlani wrote in a report last week. “Most successfully reduced their break-even sales volumes while improving their credit ratios, building up their cash balances, and refining debt.”

Since August 2009, S&P has raised its ratings on nearly 75 percent of U.S. auto suppliers, but ratings on about one-third of them are still lower than they were in March 2008.

The report confirms what the Original Equipment Suppliers Association, a supplier trade group, has been hearing from its members.

Although costs were cut dramatically as the industry downsized during the recession, North American light-vehicle production has climbed about 71 percent from 2009 to 2012, OESA President Neil De Koker said in an interview.

“Things are very good for most suppliers in North America,” De Koker said. “Suppliers are being very careful about adding additional capacity and overhead.”

Suppliers at the greatest risk are those most exposed to Europe, where the industry is riddled with excess factory capacity and light-vehicle demand is slumping.

“This will continue to put significant pressure on profitability of the entire automotive sector in Europe until these adjustments are executed,” De Koker said.

Sweden’s Autoliv, which makes seat belts, airbags and other car safety equipment, said last week that the European market has been worse than anticipated in the third quarter while the U.S. market has been better than expected, according to Reuters.


Comments

S&P sees U.S. auto suppliers' growth slowing

Theresa Clift

Published: September 26, 2012 6:00 am ET

Post Your Comments


Back to story


More stories

Image

Cascade Engineering founder Keller to step down as CEO

September 16, 2014 8:33 pm ET

Cascade Engineering Inc. is undergoing a transition as President Mark Miller will also add the role of CEO, replacing founder Fred Keller, who has...    More

Image

Canadian, Mexican injection molders form auto supply joint venture

September 16, 2014 2:26 pm ET

A new automotive parts manufacturer will open in Querétaro, Mexico, through a joint venture between Canadian automotive supplier Papp Plastics and...    More

Image

Increased capacity in the US helps Zeon Chemical supply seals globally

September 16, 2014 9:46 am ET

The automotive industry continues to be one of the driving forces of Zeon Chemicals LP., which specializes in heat-resistant and oil-resistant...    More

Image

ZF finalizes deal to buy TRW, creating another global auto supply giant

September 15, 2014 1:09 pm ET

TRW Automotive Holdings, in a supply chain megadeal that has been in the works since mid-July, said Sept. 15 it has agreed to be acquired by German...    More

Image

Delphi CEO O'Neal stepping down

September 15, 2014 12:05 pm ET

Delphi Automotive plc announced that Rodney O'Neal will retire as CEO and president on March 1, 2015, ending his 43-year career at the global automoti...    More

Market Reports

Shale Gas Market - Analysis of North American Region

This report highlights the impact of shale-based natural gas on the North American plastics market and features an in-depth analysis of production trends in the United States during 2013 and a forecast for 2014 and beyond.

Learn more

Thermoformed Packaging 2014 Market Review & Outlook – North America

This in-depth report analyzes economic and market trends, legislative/regulatory activity impacting supply and demand, business opportunities and threats, materials pricing, manufacturing technology, as well as growth strategies being implemented by thermoformed packaging companies.

Learn more

Pipe, Profile & Tubing Extrusion in North America 2014

U.S. demand for extruded plastics is expected to grow by 3 percent in 2014, with PVC remaining the largest segment.

Plastic pipe will post the strongest gains through 2018, continuing to take market share from competing materials in a range of markets.

Our latest market report provides in-depth analysis of current trends and their financial impact on the pipe, profile and tubing extrusion industry in North America.

Learn more

Upcoming Plastics News Events

January 14, 2015 - January 14, 2015Plastics in Automotive

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

More Events