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The eBearing News
October 5, 2005
S&P Revises Outlook on Minebea and NSK
copyright © 2005 eBearing Inc.
Standard & Poor's Ratings Services announced it has revised long-term credit ratings
on Japanese bearingmakers NSK Ltd., and Minebea Co. Ltd.
NSK
NSK's rating is being upgraded from "stable" to "positive" but it will continue to
hold a "BBB-" long-term debt rating.
The credit rating was upgraded a notch, "based on its improving
profitability and financial profile."
S&P went on to note that NSK has been, "aggressively reducing costs and debt, and focusing its
efforts on automobile-related products, which have smaller fluctuations in demand in the
bearings business. As a result, the company's profitability and financial profile have improved. Recently,
NSK's sales volume and operating margins have grown, backed by favorable performance
of industrial machinery products due to a recovery in capital expenditure and rising demand for
automobile-related products."
S&P hinted NSK might even be upgraded again, "if the company further improves
and stabilizes its cash flow and makes further progress in reducing debt, underpinned by its improving
profitability. One of the key factors for an upgrade includes NSK's ability to maintain a ratio of funds from
operations (before adjusting for changes in working capital) to debt at over 20% over the medium- to long-term."
Minebea
Determining the company is hampered by problems in operations outside its core bearing business, S&P demoted
Minebea one notch, from "stable" to "negative". Minebea's debt rating will stay at "BBB".
While its bearing business continued to perform well, the outlook for Minebea as a whole was impacted
by poor performance of its electronic devices segment.
S&P said its analysis leads it to expect Minebea will, "record its third consecutive year of losses in
fiscal 2005 (ending March 31, 2006) in its electronic devices business, which includes small motors
and keyboards. Given its high exposure to rapid technological change and pricing pressures, it will
be difficult for the company to revive the segment's profitability over the next 1-2 years. Although
Minebea maintains strong competitiveness and a stable earnings base in its bearings business, losses in its
electronic devices business have dragged down company-wide profit."
Further, S&P warned, Minebea's rating may be lowered again, "if the profitability of the electronic devices
business does not recover over the next 1-2 years, the asset quality of the electronic devices business is further
impaired, and downside concerns over the company-wide profits increase."
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- by Bruce A. Carr
from individual research,
tips and commercial sources.
Unauthorized reproduction is prohibited.
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Entire contents Copyright 1999-2008, eBearing Inc. All rights reserved.
eBearing.com and "... for everything that moves" are registered
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eBearing.com ... for everything that moves™
Entire contents Copyright © 1999-2008, eBearing Inc. All rights reserved.
eBearing.com and "... for everything that moves" are registered trademarks of eBearing Inc.
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