AFP – Ratings agency Standard & Poor’s on Tuesday lowered its long-term credit ratings on Sony by one notch, citing a slow recovery of its mainstay consumer electronics businesses.
The agency downgraded its long-term corporate credit ratings on the Japanese electronics giant and its subsidiaries from ‘BBB+’ to BBB. The move keeps them two steps above junk status.
However, the outlook on long-term corporate credit ratings is negative.
“The pace of recovery in earnings of Sony’s mainstay consumer electronics businesses in fiscal 2012 (ending March 31, 2013) will remain slow,” Standard & Poor’s said in a statement.
“And a strong recovery is not likely to occur until at least fiscal 2013,” it said.
“We could lower the ratings further if Sony fails to demonstrate solid signs of recovery in weakened measures of its credit quality within the next 12 months.”
The Japanese firm lost a whopping 456.66 billion yen ($5.81 billion) in the year to March, its fourth consecutive annual loss.
It also reported a widening loss in its latest quarter and cut a profit forecast for the year as the struggling firm overhauls its business.
Standard & Poor’s also said it remains “neutral on Sony’s acquisition strategy” following news reports that Sony plans for a 50 billion yen capital injection into scandal-wracked Olympus.
“Historically, Sony has made active strategic investments to maintain competitiveness and realign its business portfolios, in our view,” it said.
Olympus, which suffered massive losses following a series of bad investments, is expected to finalise the deal with Sony as early as the end of the month, according to news reports.