Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Enter the above code here:
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Rating Action:

Moody's downgrades Panasonic to A2; outlook negative

Global Credit Research - 20 Jan 2012

JPY900 billion of bonds affected

Tokyo, January 20, 2012 -- Moody's Japan K.K. has downgraded the long-term senior unsecured bonds and issuer ratings of Panasonic Corporation to A2 from A1. In addition, Moody's has downgraded the rating on Panasonic's shelf registration to (P)A2 from (P)A1.

At the same time, Moody's has affirmed the Prime-1 short-term ratings of Panasonic's supported subsidiaries, Panasonic Finance (America) Inc. and Panasonic Finance (Europe) plc.

The rating outlook is negative.

This action concludes the review for possible downgrade initiated on November 1, 2011.

RATING RATIONALE

The rating action reflects Moody's concern that the weakness in Panasonic's financial profile will continue, given the challenging operating environment.

The company's financial profile has deteriorated since it acquired the remaining stakes in its two major consolidated subsidiaries, Panasonic Electric Works Co. Ltd. (unrated) and Sanyo Electric Co. Ltd (unrated), effective April 2011.

Panasonic's net debt rose to about JPY550 billion in FYE03/2011 from about JPY100 billion in the prior year, while its adjusted-debt-to-capitalization increased to about 45% from about 35%.

The previous ratings of A1 incorporated the expectation that the company would hold a net cash position and that its adjusted-debt-to-book-capitalization would improve to the low 30%-range by FYE03/2013. This has not occurred.

In Moody's opinion, Panasonic is unlikely to restore its financial profile in a timely manner. Among the most prominent reasons are continued losses in its TV business and declines in earnings from its semiconductor business, which accounted for about 15% of consolidated sales in FYE03/2011 in total, as well as the weak earnings of Sanyo's electronic devices and energy businesses, which contributed to about 7% of consolidated sales.

Panasonic estimates that its consolidated operating profit will decline to JPY130 billion in the current fiscal year, from JPY305 billion in the prior year, while its operating margin will decrease to 1.6% from 3.5%.

A portion of this decline is due to non-recurring events -- specifically, the March 11 earthquake in Japan -- but a significant portion is also recurring.

Panasonic further expects to incur a net loss of about JPY420 billion in FYE03/2012 due to large restructuring costs mainly associated with its TV business, although most of these expenses are non-cash charges for impairment losses.

Moody's believes that Panasonic's operating profit in FYE03/2012 will be under further pressure, given weak market conditions and supply chain disruptions after the floods in Thailand. Panasonic's net loss may increase if the company is required to write-off deferred tax assets due to the government's recent decision to reduce corporate income tax rates. Weak earnings from some of Sanyo's businesses could even lead to the write-off of Sanyo's goodwill.

Therefore, Moody's believes the company is unlikely to meet its performance forecast and generate free cash flow in FYE03/2012. Net debt could increase meaningfully by the end of March 2012. Moody's estimates that it is possible that adjusted-debt-to-book-capitalization could exceed 45%.

On the other hand, Panasonic is focused on reducing fixed costs by JPY146 billion through restructuring. It has also stated that it expects synergies of JPY40 billion after the integration with Panasonic Electric Works and Sanyo in January 2012. These factors, along with the recovery from the March 11 earthquake, would boost its operating profit for FYE03/2013.

In addition, free cash flow may temporarily improve and debt fall because of reductions in capital expenditures and an expansion in the sales of non-core assets.

However, weak demand, intense competition, and a strong yen will, in Moody's opinion, continue to hurt the company's primary operations.

The A2 ratings is supported by the relatively stable earnings from the information and communication equipments business, home appliances, and Panasonic Electric Works' building-related products business. Moody's expects earnings and cash flow from these business segments will continue to provide Panasonic with a base upon which to restructure its more problematic businesses.

In aggregate, Moody's expects the next two to three years will see adjusted-debt-to-book-capitalization at approximately 40%, and adjusted-debt-to-EBITDA of approximately 2.5x.

At the same time, Moody's has affirmed the Prime-1 short-term ratings of Panasonic's supported subsidiaries. Although the amount of its committed facilities is less than the size of its CP programs, Moody's considers that the company's record of conservative use of CP funding, its high levels of cash liquidity, and its continued expected access to Japanese banks will ensure timely payments on its CP.

The rating outlook is negative as Panasonic's financial profile is still weakly positioned even after the downgrade to A2. The negative outlook represents Moody's concern that challenging operating environments may adversely affect the company's ability to improve earnings and cash flow, especially from the TV business, and reduce debt in a timely manner.

Moody's will continue to monitor Panasonic's efforts to improve its financial profile. If significant improvement looks unlikely in FYE03/2013, the ratings could be reviewed for further action in a relatively short time. Moody's notes that further downward rating movement would also negatively affect short-term ratings.

Moody's notes that Panasonic's stable relationships with its major banks are an important rating consideration, one that has contributed to lifting the company's ratings by two notches from its fundamental creditworthiness as is the case with other leading Japanese companies.

If a prolonged weakness in the global economy, a stronger yen, or greater competition continue to weigh on Panasonic's earnings, leverage, and balance sheet and if it fails to restore its financial profile, the ratings would be downgraded.

For example, if its operating margin stays below 3%, or adjusted debt/EBITDA remains above 2.5x on a sustained basis, or if adjusted-debt-to-capitalization does not stay below 40%, Moody's would consider a ratings downgrade.

Given the negative outlook, an upgrade is unlikely in the short term. The outlook could return to stable if the company can increase earnings and cash flow, while reducing debt. This is most likely to occur through an unexpectedly rapid restoration of the profitability of its low-margin businesses, such as TV and semiconductors, while earnings from other core businesses are maintained.

For instance, if Panasonic can improve its operating margin to 3%-4% and adjusted-debt-to-EBITDA to 2.0x-2.5x, and keep adjusted-debt-to-capitalization at less than 40% on a sustained basis, the outlook could return to stable.

The principal methodology used in this rating was Moody's "Asian Consumer Electronics" published on January 6, 2011, and available on www.moodys.co.jp.

Panasonic Corporation, headquartered in Osaka, is one of the world's leading manufacturers of consumer electronics products.

REGULATORY DISCLOSURES

The Global Scale Credit Ratings on this press release that are issued by one of Moody's affiliates outside the EU are endorsed by Moody's Investors Service Ltd., One Canada Square, Canary Wharf, London E 14 5FA, UK, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that has issued a particular Credit Rating is available on www.moodys.com.

Information sources used to prepare the credit rating are the following: parties involved in the ratings, public information, confidential and proprietary Moody's information.

Measures taken to ensure the quality of this information include use of public information, reviews by a third party and verification by the lead analyst.

Moody's considers the quality of information available on the issuer or obligations satisfactory for the purposes of maintaining a credit rating.

Moody's adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Credit ratings are Moody's current opinions of the relative future credit risk of entities, credit commitments, or debt or debt-like securities. Moody's defines credit risk as the risk that an entity may not meet its contractual, financial obligations as they come due and any estimated financial loss in the event of default. Credit ratings do not address any other risk, including but not limited to: liquidity risk, market value risk, or price volatility. Credit ratings do not constitute investment or financial advice, and credit ratings are not recommendations to purchase, sell, or hold particular securities. No warranty, express or implied, as to the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any such rating or other opinion or information is given or made by Moody's in any form or manner whatsoever. The credit risk of an issuer or its obligations is assessed based on information received from the issuer or from public sources. Moody's may change the rating when it deems necessary. Moody's may also withdraw the rating due to insufficient information, or for other reasons.

Moody's Japan K.K. is a credit rating agency registered with the Japan Financial Services Agency and its registration number is FSA Commissioner (Ratings) No. 2. The Financial Services Agency has not imposed any supervisory measures on Moody's Japan K.K. in the past year.

Please see ratings tab on the issuer/entity page on the Moody's website for the last rating action and the rating history.

The date on which some Credit Ratings were first released goes back to a time before Moody's Credit Ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on the Moody's website for further information.

Please see the Credit Policy page on the Moody's website for the methodologies used in determining ratings, further information on the meaning of each rating category and the definition of default and recovery.

Yoshio Takahashi
Asst Vice President - Analyst
Corporate Finance Group
Moody's Japan K.K.
Atago Green Hills Mori Tower 20fl
2-5-1 Atago, Minato-ku
Tokyo 105-6220
Japan
JOURNALISTS: (03) 5408-4110
SUBSCRIBERS: (03) 5408-4100

Richard Bittenbender
Associate Managing Director
Corporate Finance Group
JOURNALISTS: (03) 5408-4110
SUBSCRIBERS: (03) 5408-4100

Releasing Office:
Moody's Japan K.K.
Atago Green Hills Mori Tower 20fl
2-5-1 Atago, Minato-ku
Tokyo 105-6220
Japan
JOURNALISTS: (03) 5408-4110
SUBSCRIBERS: (03) 5408-4100

Moody's downgrades Panasonic to A2; outlook negative
No Related Data.

Copyright 2014 Moody's Japan K.K., Moody's SF Japan K.K. and/or their licensors and affiliates (collectively, " MOODY'S"). All rights reserved.


CREDIT RATINGS ARE MOODY'S JAPAN K.K. AND MOODY'S SF JAPAN K.K. 'S (" MJKK" AND " MSFJ" RESPECTIVELY) CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND CREDIT RATINGS AND RESEARCH PUBLICATIONS PUBLISHED BY MJKK AND/OR MJSF (" MJKK AND/OR MSFJ PUBLICATIONS") MAY INCLUDE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MJKK AND MSFJ DEFINE CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY'S OPINIONS INCLUDED IN MJKK AND/OR MSFJ PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. CREDIT RATINGS AND MJKK AND/OR MSFJ PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MJKK AND/OR MSFJ PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MJKK AND/OR MSFJ PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MJKK AND MSFJ EACH ISSUES ITS CREDIT RATINGS AND PUBLISHES MJKK AND/OR MSFJ PUBLICATIONS (AS APPLICABLE) WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.


MJKK AND/OR MSFJ CREDIT RATINGS AND MJKK AND/OR MSFJ PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS FOR RETAIL INVESTORS TO CONSIDER MJKK AND/OR MSFJ CREDIT RATINGS OR MJKK AND/OR MSFJ PUBLICATIONS IN MAKING ANY INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.


ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT. All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided " AS IS" without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing MJKK and/or MSFJ Publications.


To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY'S.


To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.


NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER.


MJKK is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody's Overseas Holdings Inc., a wholly-owned subsidiary of Moody's Corporation (MCO). MSFJ is a wholly-owned credit rating agency subsidiary of Moody’s Japan K.K. MSFJ is not a Nationally Recognized Statistical Rating Organization(" NRSRO"). Therefore credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.


MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for appraisal and rating services rendered by it fees ranging from JPY200,000 to approximately JPY350,000,000. MCO, MJKK and MSFJ also maintain policies and procedures to address the independence of MJKK and MSFJ's ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MJKK or MSFJ (as applicable) and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading "Shareholder Relations - Corporate Governance - Director and Shareholder Affiliation Policy. "


For Australia only: Any publication into Australia of this document is by MOODY'S affiliate, Moody's Investors Service Pty Limited ABN 61 003 399 657, which holds Australian Financial Services License no. 336969. This document is intended to be provided only to "wholesale clients" within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY'S that you are, or are accessing the document as a representative of, a "wholesale client" and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to "retail clients" within the meaning of section 761G of the Corporations Act 2001. MOODY'S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to "retail clients". It would be dangerous for "retail clients" to make any investment decision based on MOODY'S credit rating. If in doubt you should contact your financial or other professional adviser.

© 2014 Moody's Investors Service, Inc., Moody’s Analytics, Inc. and/or their affiliates and licensors. All rights reserved.
Regional Sites: