oTRATON SE is the leading truckmaker in Europe and South America, with market shares of about 30% in both regions. The key brands include Scania, MAN and VWCO.

oThe company has started an extensive program to use similar powertrain components across the brands, where it is targeting long-term synergies of up to EUR700 million and over-the-cycle return on sales of about 9%, up from about 7% in 2019.

oFor 2020, given the COVID-19-related recession, we expect break-even or even slightly negative reported operating profit for the industrial business, down from EUR1.7 billion in 2020 (6.6% margin) and a decline in adjusted funds from operations (FFO) to debt to about 30% from about 200% in 2019.

oWe view the company as a highly strategic subsidiary for its 89.7% owner Volkswagen AG (VW).

oWe are assigning our ‘BBB’ long-term issuer credit rating to TRATON.

oThe stable outlook reflects our expectation that the company will successfully execute its margin and cash flow preservation measures and pursue a conservative financial policy, ensuring adjusted funds from operations (FFO) to debt of about 30% at year-end 2020 and above 60% at year-end 2021.

MILAN (S&P Global Ratings) –S&P Global Ratings today took the rating actions listed above.

The rating also reflects our view of the company’s solid combined market shares of its Scania premium brand, MAN, and VWCO brands. TRATON is leading the heavy duty market with a 33% share in Europe. It is also the leading operator in Brazil with about 38% market share. In addition, it holds the no. 1 position in South America overall with a 30% market share. We believe that the company’s strong market position in its core markets is a competitive advantage against peers that are