Sony, Panasonic & Sharp are “junk status”

Global ratings agency Fitch has downgraded electricals giants Sony, Panasonic and Sharp to “speculative grade with negative outlook” (effectively, junk status).This means that while it believes they can service debts for now, they could default on them at some stage.

The BBC reported that Fitch’s downgrade of Panasonic was due to its “weakened competitiveness in its core businesses, particularly in TVs and panels, as well as weak cash generation from operations”. Panasonic reported in October that it was on course for another £6.3bn net loss for the year to March 2013. Sony also posted its seventh consecutive quarterly net loss in the three months to September 2012. Sharp’s rating was cut after its shares hit their lowest value in three decades.

Fitch’s head of Asian corporate research Matt Jamieson told the Financial Times that providing bosses focused on cash-generating areas, such as Panasonic’s domestic appliances and Sony’s camera division, and made steps to cut back unprofitable business such as TVs for Sony and personal computers for Panasonic, there may not be further downgrades.