S&P Global Ratings raised its long-term corporate credit rating on Mitsubishi Electric Corp. to A+ from A, with a stable outlook, citing the Japan-based diversified electronics maker's improving financial strength.
The rating agency projects Mitsubishi Electric's EBITDA margin to be stable above 12%, with the industrial automation systems segment driving profitability growth.
"The company's business portfolio is adequately diversified, which is a positive rating factor in our assessment because it helps Mitsubishi Electric maintain stable profitability even when some units are under downward pressure," S&P said.
S&P maintained its assessment of Mitsubishi Electric's financial risk profile as strong, saying that the company has a stronger financial base than its global peers.
The rating agency expects the company will maintain "very strong" measures of cash flow for the issuer credit rating even as it continues to increase investments in growth areas.
The rating agency said it could consider a downgrade if the company's financial standing deteriorates or the EBITDA margin is likely to remain below 11% on a sustained basis. It could, however, upgrade the rating if the company expands its scale or its EBITDA margin exceeds 15% while maintaining its strong financial status.
This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings documents referred to in this news brief can be found here.
