Sony, Panasonic debt ratings cut on TV losses

Reuters News
Posted: Jan 20, 2012 3:58 AM
Sony, Panasonic debt ratings cut on TV losses

TOKYO (Reuters) - Sony and Panasonic both had their debt ratings downgraded on Friday by Moody's Investors Service, which cited concerns about continued losses in their TV divisions.

Sony will find it hard to meet its target of pulling its TV division back into profit in the next two years, amid harsh competition and the strong yen, despite selling out of its LCD panel joint venture with Samsung Electronics, Moody's said.

It said Panasonic's financial profile had deteriorated since it bought out its two major consolidated subsidiaries, Sanyo Electric and Panasonic Electric Works, in April 2011.

Sony's rating was cut to Baa1 from A3 and Panasonic's to A2 from A1, with the outlook negative for both.

Sony has said it expects to make a loss of 175 billion yen ($2.27 billion) on TVs in the year to March but aims to halve that loss next year and make a profit on them in the year after that, after nine straight years in the red.

If it seems there is unlikely to be a significant improvement in Sony's financial profile in the year to March 2013 its ratings could be reviewed for action in a relatively short time, the ratings agency said.

Panasonic's net debt rose to about 550 billion yen in the year to March 2011 from about 100 billion yen the previous year, Moody's said.

Moody's said Panasonic was unlikely to restore its financial profile soon due to losses on TVs, lower earnings from semiconductors and weak earnings at Sanyo.

($1 = 77.0700 Japanese yen)

(Reporting by James Topham; Editing by Michael Watson)