GEO BUSINESS NEWS

Fitch cuts Toyota’s rating to A+

TOKYO: Toyota Motor Corporation, Japan’s biggest carmaker, had its credit rating cut by Fitch Ratings as weak car demand hampers earnings.

Fitch downgraded Toyota two notches to A+ from AA, its fifth-highest rating, the agency said in a statement today.
Toyota expects an annual loss of 550 billion yen ($5.7 billion) for the 12 months ending March, its second straight unprofitable year. The carmaker has predicted global sales will fall about 14 percent to 6.5 million vehicles this year as the recession hammers demand in North America, its biggest market.
“It may take several years for Toyota to approach previous levels of profitability,” said Jeong Min Pak, Director at Fitch Ratings in a phone interview. “Decision making and management reaction to the crisis seems to be faster at its rivals.”
The carmaker has 8.3 trillion yen in outstanding bonds and loans. A lower credit rating may increase Toyota’s borrowing costs.
Toyota cut the annual dividend by 40 yen to 100 yen in the year ended March, ending a streak in which the dividend jumped sixfold in 10 years. The company hasn’t yet said what it will pay this year.
Fitch cut its rating on Toyota in November and was followed by Moody’s Investors Service and Standard & Poor’s Rating Services.
“ If Toyota’s operating environment becomes such that its earnings will further deteriorate from what we expect them to be, there is a possibility that we will downgrade again,” said Shinsuke Tanimoto, a Moody’s analyst.
Standard & Poor’s analyst Osamu Kobayashi could not be reached for comment.

posted by RAJDULLARA @ 5:30 AM