Matsushita Electric Industrial Co Ltd and a host of related units have been put on CreditWatch with negative implications by Standard & Poor’s Corp, which says about $3,200m of debt is affected. Long-term ratings of MCA Inc, MCA Funding Corp, Panasonic Capital Corp and Panasonic Finance (Netherlands) BV and the long-term and short-term ratings of Victor Co of Japan Ltd (JVC) were also placed on CreditWatch, reflecting the fact that the parent guarantees all but JVC, and that Matsushita owns over half of JVC. Matsushita’s earnings and funds from operations remain relatively weak, which may make it difficult for the company to finance expected future capital expenditures without resorting to increased debt usage, the agency said, adding that despite the company’s forecast that earnings will increase somewhat in the year to March 31, net income will remain well below its peak level several years ago. Continuing earnings problems relate largely to the consumer electronics industry, and include price competition, a shift by consumers to less profitable, no-frills products, absence of new blockbuster products, and the strong yen, it said, adding that Matsushita also suffers from excess capacity and there are other factors such as the costs of financing a large portfolio of property loans.
