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S&P upgrades Sony on stable earnings, profitability

S&P Global Ratings on Sept. 4 upgraded Sony Corp.'s long-term issuer credit and senior unsecured debt ratings to A- on expectations that the company's earnings and profitability will remain strong and stable amid global uncertainties.

The rating agency also affirmed Sony's A-2 short-term issuer credit and commercial paper program ratings.

Ratings said the company's performance is largely due to its efforts to add high value to products in its main electronics business and to secure recurring services revenue, which can help the Japanese consumer-electronics maker mitigate the impact the U.S.-China trade row and deteriorating Japan-South Korea relations might have on sales of its hardware products.

The outlook is stable, reflecting the agency's belief that Sony will maintain high levels of both EBITDA and profitability despite growing uncertainties in the global economy. Ratings said Sony's performance will likely be backed by increased earnings from recurring revenue in its game, music, and camera businesses, and competitiveness in key products such as image sensors.

The agency said it can downgrade the company if it sees heightened likelihood of Sony's EBITDA margin falling and staying below 13% owing to an economic slowdown. Conversely, it can consider an upgrade if Sony maintains its EBITDA margin up closer to 16%.