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Affirmed BBB+/Stable on Fujikura Kasei | Jan 14, 2009 |
Issuer: Fujikura Kasei Co., Ltd. (4620)
JCR has affirmed the BBB+/Stable rating on senior debts of the issuer.
<Rationale>
Fujikura Kasei is a middle-sized coating material manufacturer that is affiliated with Fujikura, Ltd. The Company has many products which have large market shares, notwithstanding its company size. Its flagship products are automotive interior and exterior coatings and its main customers are Japanese automakers. And the Company is building various businesses steadily, including architectural coatings and vapor deposition coatings for mobile phones. JCR expects its operating profit for FY 2008 ending March 31, 2009 to decrease for the first time in seven fiscal years mainly because of a sharp decline in its sales of products for automakers in the second half of the fiscal year. JCR considers that the Company's financial performance in the near term will be affected by a rapid deterioration in its business environment. Although JCR considers that it can maintain a certain level of earnings, JCR will continue to watch how such deterioration will affect its earnings. On the other hand, the Company acquired Red Spot Paint & Varnish Co., Inc., an automotive coatings manufacturer in the US (hereinafter "Red Spot"), with which the Company had formed an alliance. There is much room for improvement in the financial structure of Red Spot, including its dependence on Big 3 for more than half of overall sales and its heavier fixed cost burden in comparison to its size of business. Although Red Spot has a policy to carry out structural reforms, JCR considers it necessary to watch the progress of such reforms. Its financial structure is satisfactory and the management recognizes the importance of its maintenance and strengthening of financial health as one of the management issues.
JCR has affirmed the BBB+/Stable rating on senior debts of the issuer.
<Rationale>
Fujikura Kasei is a middle-sized coating material manufacturer that is affiliated with Fujikura, Ltd. The Company has many products which have large market shares, notwithstanding its company size. Its flagship products are automotive interior and exterior coatings and its main customers are Japanese automakers. And the Company is building various businesses steadily, including architectural coatings and vapor deposition coatings for mobile phones. JCR expects its operating profit for FY 2008 ending March 31, 2009 to decrease for the first time in seven fiscal years mainly because of a sharp decline in its sales of products for automakers in the second half of the fiscal year. JCR considers that the Company's financial performance in the near term will be affected by a rapid deterioration in its business environment. Although JCR considers that it can maintain a certain level of earnings, JCR will continue to watch how such deterioration will affect its earnings. On the other hand, the Company acquired Red Spot Paint & Varnish Co., Inc., an automotive coatings manufacturer in the US (hereinafter "Red Spot"), with which the Company had formed an alliance. There is much room for improvement in the financial structure of Red Spot, including its dependence on Big 3 for more than half of overall sales and its heavier fixed cost burden in comparison to its size of business. Although Red Spot has a policy to carry out structural reforms, JCR considers it necessary to watch the progress of such reforms. Its financial structure is satisfactory and the management recognizes the importance of its maintenance and strengthening of financial health as one of the management issues.
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