S&P Global Ratings Changes Outlook#
S&P Global Ratings has updated its outlook on Hyster-Yale Inc. (NYSE:HY) from stable to negative. The agency has also confirmed its 'B' issuer credit rating for the company. This change is primarily due to concerns about high leverage, which refers to the amount of debt a company has compared to its earnings. Hyster-Yale's leverage is expected to remain above the 5x threshold for at least the next couple of quarters.
Financial Performance Overview#
Hyster-Yale's adjusted EBITDA margin, a measure of profitability, has decreased significantly, dropping to 2.2% in 2025 from 8.4% in 2024. Meanwhile, leverage has surged to 8.1x from 1.6x as of December 31, 2025. This decline in performance is attributed to lower sales volumes of lift trucks, ongoing tariff costs, and increased borrowing. The company's revenue fell by 12.5%, totaling $3.7 billion in 2025, due to weak lift truck markets and competition driving prices down.
Future Expectations#
Looking ahead, S&P Global Ratings anticipates that market conditions will improve in 2026. They project an increase in the adjusted EBITDA margin to 3.6% and a reduction in leverage to 4.3x by the end of the year. This optimistic forecast is based on expectations of a modest market recovery and the implementation of cost-reduction programs aimed at boosting profitability.
Operational Initiatives and Cash Flow#
Hyster-Yale has reported a significant increase in bookings, with a 15% rise in the third quarter of 2025 and a 42% increase in the fourth quarter. The company is focusing on operational improvements, including optimizing its manufacturing processes and investing in technology upgrades. Despite facing operational challenges, Hyster-Yale maintained positive free operating cash flow in 2025, which is expected to continue in 2026, albeit with only a modest increase due to ongoing capital expenditures.