Sony, Panasonic downgraded
November 22, 2012
US ratings agency Fitch on Thursday downgraded two major Japanese consumer electronics companies, dealing another blow to the country's embattled industry sector.
The agency slapped a speculative rating on both Sony and Panasonic. Fitch cut Panasonic by two notches to BB, while downgrading Sony to BB-, lowering it to the same junk status.
"The downgrade reflects Panasonic's weakened competitiveness in its core businesses, particularly in TVs and panels as well as weak cash generation from operations," Fitch said in a statement. "It also reflects the agency's view that the company's financial profile is not likely to show material improvement in the short to medium term.
Critical condition
Assessing Sony's performance, Fitch said "a meaningful recovery will be slow, given the firm's loss of technology leadership in key products and the strong yen."
Japan's relatively strong national currency has caused a headache for Japanese electronics firms as it has made their products less competitive overseas and resulted in them losing market shares to rivals from South Korea and Taiwan.
Japan's electronics titan Sharp was already downgraded to junk status in early November. It had announced it was expecting record losses throughout 2012. The company's management went as far as to say that the very existence of the firm was at stake.
hg/kms (dpa, AFP)