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Rating action

Scope Ratings GmbH (Scope) has today affirmed the A/Stable issuer rating for DNV Group AS (DNV). Scope has also affirmed the A rating on senior unsecured debt and the short-term debt rating of S-1.

The full list of rating actions and rated entities is at the end of this rating action release.

Key rating drivers

Business risk profile: BBB+ (unchanged). DNV’s business risk profile continues to benefit from its leading global position and strong brand recognition in maritime classification and related services. Additionally, the company plays an active role in supporting the energy transition of its industry clients through its Energy Systems division (positive ESG factor). However, the assessment is constrained by moderate profitability, reflecting the ongoing strategic emphasis on growth, and by a concentration of earnings in its largest service lines.

In 2024, DNV maintained its leading position in fleet-in-service classification, with a global market share of 18% by gross tonnes. At the same time, the company's share of the more cyclical newbuilding market increased, with DNV securing 29% of ship orders — up from 18% in 2023. This significant increase was primarily driven by a surge in newbuilds using alternative fuels, a market segment in which DNV is well-established.

In terms of business areas, Maritime and Energy Systems still account for the majority of group revenues at 33% and 35%, respectively, in 2024. The remaining revenues were generated by Business Assurance (12%), Supply Chain and Product Assurance (7%), Digital Solutions (4%), and The Accelerator (8%). DNV remains well diversified geographically, supported by its global reach and diverse customer base. The company's customer concentration remains low, meaning the loss of a large customer would not significantly impact its cash flow generation.

DNV's cash flow generation remains concentrated on its largest service lines, particularly classification services, which limits the company's diversification and leaves it susceptible to the underlying cyclicality of its end-markets. This situation is likely to continue for the foreseeable future, despite an expected improvement as part of DNV's strategy for inorganic and organic growth.

DNV’s profitability decreased in 2024, with a EBITDA margin* of 14.9%, down from 15.8% in 2023. This was due to an anticipated weakening, driven by growth in lower-margin services, as well as ongoing cost inflationary pressures across business lines. Scope expects the EBITDA margin to stabilise at around 15% in the absence of any transformative transactions with dilutive margin effects.

Financial risk profile: AA (unchanged). DNV’s financial risk profile provides strong support to the issuer rating. The AA category assessment reflects robust internal cash generation, a sustained net cash position, and a prudent financial policy underpinned by a solid liquidity profile.

DNV's financial profile at year-end 2024 was characterised by a gross debt level of NOK 3.8bn, reflecting a strategic shift in its funding structure following the refinancing of a NOK3bn term loan through bond issuance (NOK 2bn) and internal liquidity, with lease liabilities contributing NOK 1.7bn. After adjusting for restricted cash and marketable equity investments, the company’s net cash position was NOK 4.1bn.

Despite assumptions of elevated capital expenditure for inorganic growth of around NOK 1.6bn per annum, Scope expects the net cash position to be sustained over the 2025–2027 period. This supports Scope’s assessment of very strong credit metrics and debt-servicing capacity. The company’s robust generation of free operating cash flow of around NOK 3bn per year, combined with its historically limited need for shareholder distributions to its ultimate owner, the Det Norske Veritas Foundation, underpins this expectation. This results in a build-up of cash, unless funds are used for transformational mergers and acquisitions (M&A), or invested in assets that are not netted as cash when calculating Scope-adjusted debt. There is significant headroom until a potential net debt position materialises.

Liquidity: adequate (unchanged). Liquidity is adequate with available liquidity sources expected to cover the company’s short-term maturities by more than 200%.

The liquidity profile is supported by substantial cash reserves. As of the end of 2024, the company had NOK 7.9bn of available cash and marketable securities (excluding restricted cash of NOK 984m and equity funds of NOK 1,149m). Other sources of liquidity are expected to be positive free operating cash flow and an undrawn revolving credit facility of NOK 3bn, maturing in 2028.

The next notable debt maturities are the bonds issued in Q4 2024, which mature between 2027 and 2029.

Supplementary rating drivers: credit-neutral (unchanged). No adjustments have been made for supplementary rating drivers.

Despite its expansion strategy, DNV has maintained an increasing headroom to its maximum leverage threshold (net debt/EBITDA) of 2x over the past few years. In addition, the main activity of DNV’s ultimate shareholder, the Det Norske Veritas Foundation, is to own and further develop DNV's business activities, which provides reassurance that any cash upstream (historically very limited) will not be detrimental to the company’s financial risk profile.

The financial policy and ownership structure has implicitly been incorporated in the financial risk profile assessment.

One or more key drivers of the credit rating action are considered an ESG factor.

Outlook and rating sensitivities

The Outlook is Stable, reflecting Scope’s expectation that DNV will remain in a net cash position over the next few years, driven by robust cash flow generation and relatively stable profitability, while keeping its leading position in maritime classification and services alongside growth in other business areas.

The upside scenario for the ratings and Outlook is:

1. DNV Group were to sustain their net cash position (underlined by financial policy) combined with improved profitability and/or diversification through successful organic and inorganic growth.

The downside scenario for the ratings and Outlook is:

1. Increased leverage with debt/EBITDA moving towards 1x, particularly due to a financial policy change or other event reducing the likelihood of subsequent deleveraging.

Debt ratings

Scope has affirmed the A instrument rating on senior unsecured debt, in line with the issuer rating.

The short-term debt rating is affirmed at S-1. It is based on the A/Stable issuer rating and reflects DNV’s better-than-adequate liquidity cover as well as adequate banking relationships and adequate standing in capital markets.

Environmental, social and governance (ESG) factors

The demand for assurance and risk management services is supported by growing importance of ESG and related compliance. This includes the secular transition to cleaner energy and digitalisation, as well as adherence to increasingly complex regulations and quality control. We believe this underpins the future cash flow of DNV as a globally recognised provider of services to meet these developments.

Through its Energy Systems area, DNV plays a role in and benefits from industry transition towards decarbonisation and the usage of more sustainable, green energy.

All rating actions and rated entities

DNV Group AS

Issuer rating: A/Stable, affirmation

Short-term debt rating: S-1, affirmation

Senior unsecured debt rating: A, affirmation

*All credit metrics refer to Scope-adjusted figures.

Stress testing & cash flow analysis
No stress testing was performed. Scope Ratings performed its standard cash flow forecasting for the company.

Methodology
The methodologies used for these Credit Ratings and/or Outlook, (General Corporate Rating Methodology, 14 February 2025; European Business and Consumer Services Rating Methodology, 15 January 2025), are available on scoperatings.com/governance-and-policies/rating-governance/methodologies.
Information on the meaning of each Credit Rating category, including definitions of default, recoveries, Outlooks and Under Review, can be viewed in ‘Rating Definitions – Credit Ratings, Ancillary and Other Services’, published on scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Historical default rates of the entities rated by Scope Ratings can be viewed in the Credit Rating performance report at scoperatings.com/governance-and-policies/regulatory/eu-regulation. Also refer to the central platform (CEREP) of the European Securities and Markets Authority (ESMA): registers.esma.europa.eu/cerep-publication/. A comprehensive clarification of Scope Ratings’ definitions of default and Credit Rating notations can be found at scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Guidance and information on how environmental, social or governance factors (ESG factors) are incorporated into the Credit Rating can be found in the respective sections of the methodologies or guidance documents provided on scoperatings.com/governance-and-policies/rating-governance/methodologies.
The Outlook indicates the most likely direction of the Credit Ratings if the Credit Ratings were to change within the next 12 to 18 months.

Solicitation, key sources and quality of information
The Rated Entity and/or its Related Third Parties participated in the Credit Rating process.
The following substantially material sources of information were used to prepare the Credit Ratings: public domain, the Rated Entity and Scope Ratings' internal sources.
Scope Ratings considers the quality of information available to Scope Ratings on the Rated Entity or instrument to be satisfactory. The information and data supporting these Credit Ratings originate from sources Scope Ratings considers to be reliable and accurate. Scope Ratings does not, however, independently verify the reliability and accuracy of the information and data.
Prior to the issuance of the Credit Rating action, the Rated Entity was given the opportunity to review the Credit Ratings and/or Outlook and the principal grounds on which the Credit Ratings and/or Outlook are based. Following that review, the Credit Ratings and/or Outlook were not amended before being issued.

Regulatory disclosures
These Credit Ratings and/or Outlook are issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0. The Credit Ratings and/or Outlook are UK-endorsed.
Lead analyst: Thomas Faeh, Executive Director
Person responsible for approval of the Credit Ratings: Karl Yuan Pettersen, Managing Director
The Credit Ratings/Outlook were first released by Scope Ratings on 2 February 2023. The Credit Ratings/Outlook were last updated on 1 November 2024.

Potential conflicts
See scoperatings.com under Governance & Policies/Regulatory for a list of potential conflicts of interest disclosures related to the issuance of Credit Ratings, as well as a list of Ancillary Services and certain non-Credit Rating Agency services provided to Rated Entities and/or Related Third Parties.

Conditions of use/exclusion of liability
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