Moody's downgrades Toshiba's credit rating

[TOKYO] Moody's downgraded the credit rating of embattled electronics giant Toshiba on Monday days after the conglomerate announced deep mid-year operating losses late last week.

The agency slashed the Japanese company's rating from Baa2 to Baa3 and also changed Toshiba's outlook from stable to negative.

"The rating action was prompted by Toshiba's announcement of its (first six months) results, which indicated that profitability and cash flow generation have both declined materially," Masako Kuwahara, a Moody's senior analyst, said in a statement.

"The negative outlook reflects our ongoing concerns over the company's operations and ability to sustainably reduce its current high leverage as well as restructure its operations in a sustainable and profitable manner," she said.

The downgrade came after Toshiba on Saturday announced a whopping operating loss of 90 billion yen (S$1.05 billion) for six months to September.

The firm cited deterioration of its PC and appliances businesses, while its mainstay microchip business faced falling prices that also pressured profits.

The operating loss - its first in six years for the first half - compares to a year-earlier 137.8 billion yen profit.

Toshiba is also entangled with what is considered to be one of the most damaging accounting scandals to hit Japan in recent years.

The company said Saturday it sued five former executives for damages over their alleged roles in the huge accounting scandal.

The announcement came as the 140-year-old company attempts to restore its reputation following a billion-dollar profit-padding scandal, stemming from top executives pressuring underlings to systematically inflate financial figures for years.

AFP