NEW YORK (Reuters) -- Fitch Ratings downgraded its ratings on Daimler and said it expects the car company's performance for this year and next to be much weaker than previously expected.
The agency cut Daimler's senior unsecured ratings by one notch to "BBB-plus," or three notches above speculative, or "junk" status.
"Fitch has reassessed its view and revised its forecasts for Daimler in 2009 and 2010 and now expects the company to exhibit much weaker profitability and cash generation than previously anticipated," the agency said in a statement.
The outlook for the ratings is stable, but could be changed if the current slump in car and truck sales were to gain pace, Fitch said.
Sustained negative free cash flow generation and refinancing issues would also be negative factors, it said.
Fitch is expecting a protracted sales decline at Mercedes-Benz Cars, Daimler Truck "Profitability will suffer from falling sales and lower fixed-cost absorption and this should also lead to much weaker cash flow from operations," said the agency.