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NEW YORK, July 23 (Reuters) - Fitch Ratings downgraded Volkswagen AG's debt ratings on Friday, citing expected declines in profitability.
Fitch said it forecasts lower earnings and cash generation for the German car company's fiscal years 2004 and 2005. The company has launched a program to improve performance by cutting costs, reducing investment, and improving sales performance, but executing this program may be difficult, Fitch said.
Volkswagen's chief executive said on Friday that market expectations of 4.30 euros ($5.27) earnings per share in 2005 were in line with the company's forecasts.
Fitch cut Volkswagen's senior unsecured rating to "A-minus," the fourth lowest investment-grade rating, from "A." The ratings agency also cut the company's short-term rating to "F2," the third highest level, from "F1." The outlook for the ratings over the next 18 to 24 months is negative, Fitch said.