Under fire Japanese electronics manufacturer Sony has seen its long term debt rating downgraded to the lowest investment grade level by Moody’s Investors Service (MIS).
The consumer electronics developer had its credit rating dropped from a Baa2 to a Baa3, which is its sixth downgrade since its fall from an Aa3 rating in 2003. Sony posted an improved year-on-year performance in the July-September 2012 fiscal period, notching up a loss of just ￥15.5 billion (£122.4m) as it seeks to recover from an overall 2011/12 loss of some £3.6 billion.
The credit ratings agency attributed its decision to “prolonged operating losses in TVs and mobile phones, as well as significant declines in earnings from digital imaging products and games.”
Sony has tried to combat its ailing fortunes with heavy restructuring that has led to thousands of jobs being cut as a means of pushing down operating costs, also notably shuttering its chemical business as a means of creeping out of the red ink.
Moody’s has agreed that the Japanese company’s attempts to right its ship are a step in the right direction, but simultaneously concedes that more drastic measures may need to be taken for Sony to see its fortunes improve further.
“The continued negative ratings outlook reflects Moody's view that without robust restructuring in the coming 12-18 months, Sony's non-financial services businesses will at best achieve roughly break-even, and are also at risk of remaining unprofitable," added MIS in its report.
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