Rating and Investment Information, Inc (R&I) has announced the following: Taiheiyo Cement Corp. Issuer Rating: BBB, Affirmed Rating Outlook: Stable Commercial Paper: a-2, Affirmed.
Rationale
Taiheiyo Cement Corp. is the largest cement manufacturer in Japan. The company has a foothold in overseas markets as well, including North America, China, Vietnam, the Philippines and South Korea.
The earnings structure of the domestic cement business has improved as a result of a review of the production system and personnel cutbacks.
Domestic demand will likely be solid for some time thanks partly to demand associated with restoration from the Great East Japan Earthquake. Furthermore, losses from the North American operations have declined as demand bottomed out and unprofitable businesses were discontinued, and solid profit contributions can be expected from the Asian operations.
Given these factors, as well as decent profits from non-cement businesses, such as environmental and resource businesses, R&I believes the company as a whole will be able to achieve a certain level of profits and cash flow. However, the balance between debt and cash flow and the debt-equity structure are not as good as the rating suggests. The Rating Outlook is Stable.
