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After an exceptionally rocky year, Moody’s Investor Service expects corporate profits to rebound in 2021 for North American non-financial companies, underpinning the rating agency’s stable outlook for the year ahead.

Moody’s said that its baseline forecast for the coming year sees corporate revenues and profits coming in stronger than they were this year, albeit below 2019 levels.

“Our outlook for North American non-financial companies is stable,” said Edmond DeForest, vice president and senior credit officer with Moody’s, and lead author of the rating agency’s report, in a release.

“While conditions have improved since the sharp Covid-19 economic shock, the uncertain direction of the pandemic weighs on a post-recession recovery,” DeForest added.

Indeed, the recovery will not be uniform, Moody’s predicted, and some sectors will bounce back faster than others.

Moody’s said that individual companies’ prospects “depend on their exposure to pandemic-related growth disruption.”

While the scale and scope of future disruption driven by Covid-19 is uncertain, the rating agency generally expects the sectors that were initially hit the hardest by the pandemic to continue feeling the effects most acutely.

“Most industry outlooks have been stabilized after deteriorating at the start of the pandemic,” Moody’s said. “Yet the list of positive outlooks also remains short. Sectors most affected by the coronavirus remain vulnerable.”

Large companies with strong liquidity positions, due to their cash buffers and access to credit markets, “will be better able to withstand a prolonged period of weaker revenue,” Moody’s said. “Low rates increase affordability, but companies with overleveraged balance sheets will need to recover earnings and cash flow growth.”

Additionally, government policies will continue to play a big part in the recovery process, the report said.

Moody’s suggested that lasting effects of the pandemic, such as the shift to remote working in many sectors, will also factor into the recovery.

“The resulting demographic shift will create both challenges and opportunities for a variety of companies and sectors,” the rating agency said. “Consumer confidence will hinge on therapeutics, vaccines and effective pandemic management.”

While credit conditions are improving rapidly, Moody’s also said that it expects to see continued pandemic-driven defaults through the spring. The rating agency forecasts that the U.S. speculative-grade default rate will peak in early 2021.

“As earnings and cash flows recover, the default rate will decrease,” Moody’s said.