Sanyo Electric Co, Osaka was not doing too well even before the deep Japanese recession struck, and the outlook has not improved: Moody’s Investors Service Inc has downgraded the long-term debt rating of the company to Baa3 from Baa1, and the commercial paper rating of Sanyo’s financially supported subsidiary, Sanyo Electric Finance Netherlands BV to Prime-3 from Prime-2. The downgrade reflects expectations that Sanyo’s earnings and cash flow will come under considerable pressure because of the sluggish consumer electronics markets, and that the compay’s market share will weaken. A high level of market saturation, weak consumer spending, competitive pricing of consumer electronics and the strong yen may continue to affect adversely Sanyo’s operating performance, and its commercial and industrial sectors will also be affected adversely by depressed capital expenditures in the manufacturing and retail sectors and a decline in building construction, Moody’s said. The company’s earlier efforts of reducing work force and moving facilities offshore will take time to implement because of Japan’s full employment system, and will result in continued poor operating results, low fixed charge coverage and high leverage over the intermediate period, the agency said.
