Bloomberg News

Panasonic Shares Fall After Ratings Cut by Moody’s: Tokyo Mover

September 11, 2012

Panasonic Corp. (6752), the Japanese electronics maker trying to recover from a record annual loss, fell in Tokyo trading after Moody’s Investors Service cut its credit ratings, citing weak earnings and higher debt.

The television, camera and battery maker fell 1.7 percent to 534 yen at the close of trading in Tokyo, after dropping as much as 3.3 percent, the biggest intraday decline since Sept. 3. Its long-term credit rating was lowered two levels to Baa1 from A2 and its short-term rating by one rank to Prime-2 from Prime-1, Moody’s said in a statement yesterday. Both ratings are assigned with a stable outlook, the ratings company said.

Consumer-electronics makers Sony Corp. (6758), Sharp Corp. and Panasonic are restructuring after a strong yen and competition with South Korea’s Samsung Electronics Co. (005930) and Cupertino, California-based Apple Inc. (AAPL:US) pushed them into losses. Panasonic’s downgrade is because of the company’s low profitability and net debt that increased almost eightfold after acquisitions of Sanyo Electronics Co. and Panasonic Electric Works Co., Moody’s said.

“The question remains whether Panasonic can restructure itself in a manner that generates consistent and sustainable competitive advantages in the TV and panel businesses,” Moody’s said. The company is “plagued by weak consumer demand in major global markets, pressure from low-cost producers, and a stronger yen,” it said.

The maker of Viera televisions and Lumix cameras is trying to turn around its unprofitable TV, electronic component and battery operations this fiscal year after closing plants and eliminating 36,000 jobs amid falling prices and a surging yen. New President Kazuhiro Tsuga has pledged to revive the Japanese manufacturer “by all means.”

Panasonic’s Debt

Panasonic, Japan’s biggest appliance maker, forecasts net income of 50 billion yen ($639 million) for the year started April 1, compared with a 772 billion-yen loss the previous 12 months. The manufacturer may rearrange businesses and withdraw from unprofitable operations, Tsuga said in July.

The company’s net debt increased to more than 950 billion yen at the end of June from about 120 billion yen at the end of March 2010, Moody’s said. Panasonic will probably cut costs by 130 billion yen this fiscal year after reducing them by 64 billion yen in the first quarter from a year earlier, Chief Financial Officer Hideaki Kawai has said.

Last month, Moody’s said Sony’s Baa1 long-term rating and Prime-2 short-term rating may be lowered. Moody’s cut Sharp’s short-term ratings to Not-Prime from Prime-3 earlier this month, citing a high level of short-term debt and weak operating performance.

To contact the reporter on this story: Mariko Yasu in Tokyo at myasu@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net


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