Quotes: US MENA   Enter Symbol: NewsLetter: Search: advanced

Fitch cuts credit rating on Japan's Sharp to junk  Join our daily free Newsletter

MENAFN - AFP - 02/11/2012

No. of Ratings : 0
Add to Mixx!


(MENAFN - AFP) Fitch Ratings dealt another blow to Sharp Corp. on Friday, saying it had cut the embattled Japanese electronics giant's credit rating to junk -- the second such downgrade by a global ratings agency.

The move by Fitch came after Osaka-based Sharp said on Thursday it would post a whopping 5.6 billion annual loss while warning it had doubts about carrying on as a viable company.

Fitch said it slashed its view on the maker of Aquos-brand electronics by six notches to a rating of B minus, which means its credit rating was no longer considered a safe, investment-grade bet.

The announcement was the latest piece of bad news for Japan's once-mighty electronics giants who have suffered from a high yen, slowing demand in key export markets, fierce overseas competition and strategic mistakes that have pounded their balance sheets.

"The downgrade reflects growing risks to Sharp's liquidity position, reinforcing Fitch's view that the technology company will struggle to turn its business around," a Fitch statement said Friday.

In August, S&P also cut Sharp's rating to junk status.

On Friday, Fitch said Sharp's cash balance was about 2.75 billion at the end of September, well below more than 11 billion worth of debt coming due within a year, and it may have trouble securing further bank loans.

A capital injection from Taiwan's Hon Hai Precision, which makes Apple gadgets in China, appears to be in doubt and Sharp has put up real-estate -- including its headquarters -- as collateral for desperately needed cash.

"Fitch does not foresee any meaningful operational turnaround in the company's core business over the short- to medium-term due to deterioration in its market position as well as in price competitiveness as a result of a high Japanese yen," it said.

Sharp voiced similar worries on Thursday, saying it was "in circumstances in which material doubt about its assumed going concern is found".

The company is undergoing a painful restructuring in its efforts to return to profitability, promising thousands of job cuts while cutting wages for employees -- from the factory floor to the executive boardroom -- to shore up its bleeding balance sheet.

Also Friday, S&P downgraded rival Panasonic's credit rating for the second time in a year, after it warned of a mammoth 9.6 billion annual loss as it undergoes its own corporate overhaul.

Panasonic, Sharp and rival Sony have all struggled, particularly in their television business amid falling prices and stiff competition from overseas rivals including South Korea's Samsung Electronics.

Since September, a diplomatic row over an East China Sea island chain claimed by Tokyo and Beijing has seen many Chinese consumers boycott Japan-branded exports, also digging into manufacturers' results.


  MENA News Headlines

Click to Apply



Middle East North Africa - Financial Network

MENAFN News Market Data Countries Tools Section  

Middle East North Africa - Financial Network

Main News
News By Industry
News By Country
Marketwatch News
UPI News
Comtex News

IPO News
Islamic Finance News
Private Equity News

How-To Guides
Technology Section

Travel Section

Search News

Market Indices
Quotes & Charts

Global Indices
Arab Indices

US Markets Details


Oil & Energy

Currencies Cross Rates
Currencies Updates
Currency Converter

USA Stocks
Arab Stocks

Saudi Arabia 

Investment Game
Economic Calendar
Financial Glossary

Portfolio Tracker


Financial Calculators

RSS Feeds [XML]

Corporate Monitor


Real Estate
Submit Your Property

Arab Research
Buy a Research

Press Releases
Submit your PR

Join Newsletters

© 2000 menafn.com All Rights Reserved.  Terms of Service | Privacy Policy | Contact Us | Advertise | About MENAFN | Career Opportunities | Feedback | Help