USA: Ratings agency downgrades Visteon
Fitch Ratings on Wednesday reportedly said it is changing its outlook on Visteon from positive to negative due to uncertainty about the auto supplier's future as it deals with higher raw material prices and possible production cutbacks at automakers.
The Associated Press (AP) noted that Fitch assigned a positive outlook to Visteon in May after the company announced a restructuring agreement that allowed it to transfer 23 of its most unprofitable plants back to its former parent Ford - that transfer was completed in October.
Fitch reportedly said the agreement significantly improved Visteon's operating structure, reducing average hourly wages for manufacturing workers from $38 to $17 because it has fewer plants with workers represented by the United Auto Workers.
But, AP added, the ratings agency said Visteon faces daunting challenges, including the high cost of materials like steel and the possibility of production cutbacks at Ford and other automakers. Fitch said Visteon also has a substantial amount of restructuring left to do.
"These issues have the potential to quickly lead to significant liquidity and balance sheet erosion," Fitch said in a statement cited by The Associated Press. Fitch rates Visteon as below investment-grade.