Nissan Credit Rating Cut to Junk by S&P Global Ratings
Nissan Motor Co.’s credit rating was cut by a notch to junk status of BB+ at S&P Global Ratings.
(Bloomberg) -- Nissan Motor Co.’s credit rating was cut by a notch to junk status of BB+ at S&P Global Ratings, citing weaker profitability and that a strong recovery in the Japanese carmaker’s sales was “unlikely,” the agency said in statement.
It will take longer than expected for Nissan’s automobile division to recover from wavering sales and production, S&P said in a statement Tuesday.
While Nissan has recovered form two years of losses and is sticking to its forecast to post operating profit of ¥360 billion ($2.7 billion) for the fiscal year ending this month, the manufacturer has had a dearth of new models to appeal to car buyers. A weaker yen in late 2022 also helped to boost income brought home, making up for production snags, but that’s fading as the currency strengthens this year.
Read more: Nissan Keeps Profit View as Yen Gain Fades, Ongoing Shortage
Supply chain disruptions will probably continue longer, while rising costs, in addition to slowing global economic growth and rising interest rates, means that the global auto industry is likely to see tough conditions over the next year or two, the agency said.
The outlook for the Japanese carmaker is stable, S&P said, citing that profitability is gradually improving and that the company is being conservative in its financial planning.
(Updates with detail on Nissan profitability.)
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