S&P cuts credit rating of Japan's Panasonic after loss news
November 3, 2012, 12:03 am TWN
TOKYO -- Standard & Poor's downgraded Panasonic's credit rating on Friday, the second time in a year, after the struggling Japanese electronics giant warned of a mammoth US$9.6 billion annual loss.
The global agency cut Panasonic's rating by two notches to BBB as it warned that the firm's huge loss forecast threatened its recovery during a painful restructuring.
On Wednesday, Panasonic said it would book a loss of 765 billion yen (US$9.6 billion) in the year to March mainly on restructuring and tax charges, close to its record loss last year and a reversal of its previous forecast of a profit.
"S&P believes such huge losses for the second year in a row weaken the company's financial profile and could further slow its recovery in the next one to two years," the agency said in a statement Friday.
"In S&P's view, losses of this scale for two years running hurt the company's financial standing and could set back its recovery in the short term," it added.
Also Friday, Fitch Ratings slashed Sharp's credit rating to junk — the second such downgrade on the company by a global ratings agency.
S&P last cut Panasonic's rating in February as its finances deteriorated.
Like rivals Sharp and Sony, Panasonic has suffered in its television business because of falling prices and stiff overseas competition, while a strong yen and the global slowdown have also hit manufacturers.
The giants of Japan's electronics sector have suffered earlier credit rating downgrades owing to worries about their prospects.
Despite the ratings downgrade, S&P said its outlook for Panasonic was "stable" as the firm's operating profit improves and management slashes costs to shore up its battered balance sheet.
"While we expect Panasonic's operating environment to remain difficult, Standard & Poor's believes the company will maintain relatively stable profitability and financial standing and will stage a gradual recovery in the next few years," it said.