S&P Global Ratings has moved the outlook on Hyster-Yale Inc. to negative from stable, while leaving the company’s issuer credit rating unchanged at 'B'. The ratings firm said the change reflects leverage that is likely to remain above its 5x downside threshold for at least the next quarter or two, together with heightened demand uncertainty and persistent cost pressures, including tariffs.
The rating action follows a sharp deterioration in Hyster-Yale’s credit metrics in 2025. S&P reported that the company’s adjusted EBITDA margin narrowed to 2.2% in 2025, down from 8.4% in 2024. Over the same period, S&P-calculated leverage rose to 8.1x from 1.6x as of Dec. 31, 2025. S&P attributed the deterioration to materially lower lift truck volumes, unmitigated tariff costs and increased borrowings.
Revenue in 2025 fell 12.5% to $3.7 billion as the lift truck market softened, customers shifted toward lower-priced offerings and global competitors engaged in aggressive pricing. Those market dynamics, combined with higher financing needs, pushed leverage well above the agency’s downside threshold and prompted the outlook revision.
Despite the near-term setback, S&P expects operating conditions to improve through 2026. The agency’s projections envisage an adjusted EBITDA margin rising to 3.6% and leverage falling to 4.3x by the end of 2026. That forecast assumes a modest market recovery alongside cost-reduction programs and operational initiatives that would lift adjusted EBITDA to $144 million, up from $83 million in 2025.
S&P noted that Hyster-Yale saw a sequential bounce in bookings late in 2025, with bookings up roughly 15% in the third quarter and about 42% in the fourth quarter on a sequential basis. The ratings agency cautioned, however, that any improvement in credit measures is expected to be concentrated in the back half of 2026.
Planned cost and operational actions cited by S&P include optimizing the manufacturing footprint, increasing automation and realigning organizational structures to streamline internal functions. Capital expenditure commitments are expected to remain elevated as the company invests to scale modular and technology offerings, upgrades IT infrastructure including a new enterprise resource planning system, and further optimizes its manufacturing footprint.
On cash flow, S&P affirmed that Hyster-Yale generated positive free operating cash flow in 2025 despite the operational headwinds. That outcome was driven in part by a working capital inflow resulting from released inventory amid lower volumes. The ratings firm expects free operating cash flow to stay positive in 2026 but to rise only modestly year over year. The agency’s view is that working capital will become less of a cash source and that capital spending will remain elevated, tempering the extent of cash-flow improvement even if EBITDA recovers.
Summary
S&P moved Hyster-Yale’s outlook to negative while retaining the 'B' issuer rating after a marked worsening in adjusted EBITDA margin and a jump in leverage in 2025. The ratings agency projects a gradual recovery in 2026 supported by modest market improvement and company cost and operational measures, but warns that improved credit metrics will likely be concentrated in the latter half of the year.
Key points
- S&P revised the outlook to negative from stable and affirmed Hyster-Yale’s 'B' issuer credit rating.
- Adjusted EBITDA margin fell to 2.2% in 2025 from 8.4% in 2024; leverage rose to 8.1x from 1.6x as of Dec. 31, 2025.
- S&P forecasts margin recovery to 3.6% and leverage to 4.3x by year-end 2026, assuming modest market improvement and execution of cost and operational initiatives.
Risks and uncertainties
- Leverage is currently above S&P’s 5x downside threshold and is expected to remain elevated for at least the next quarter or two, posing continued rating pressure - this affects credit markets and creditors exposed to the company.
- Demand uncertainty and tariff-driven cost pressures could sustain margin weakness and slow the recovery in adjusted EBITDA - this impacts the industrials sector and supply-chain-dependent markets.
- Elevated capital spending and a reduction in working capital as a cash source could limit free operating cash flow improvement despite higher EBITDA in 2026 - this bears on the company’s liquidity profile and investors focused on cash generation.