Nippon Sheet Glass credit rating hurt by volatile demand

Nippon Sheet Glass Co.“s senior long-term credit rating and long-term bonds have been downgraded from A- to BBB+ by Rating and Investment Information (R&I).
Nippon Sheet Glass is Japan“s second-lar…

Nippon Sheet Glass Co.“s senior long-term credit rating and long-term bonds have been downgraded from A- to BBB+ by Rating and Investment Information (R&I). Nippon Sheet Glass is Japan“s second-largest glass manufacturer behind Asahi Sheet Glass Co. in terms of market share for plate glass for construction and automobiles. However, offshore business development is slow in certain areas. The company“s information electronics division, developed to diversify sources of revenue, has become a burden to the company. With North American communications companies in particular showing continuing reluctance to make capital investments, the demand for high density wavelength division multiplexing transmission (WDM) lenses also continues to fall and the prospect for the March 2003 term is for a consolidated business loss. Nippon Sheet Glass is making progress in retiring WDM lens manufacturing facilities and disposing of inventory to help improve its profit and loss break-even point. However, with little prospect of a recovery in demand, a return to profit looks difficult at present. There is extreme demand fluctuation for WDM lenses, glass magnetic discs and glass substrates for liquid-crystal displays, and there is also strong pressure to drop prices. While the company has cut costs through sales of assets, it has purchased more stock from Pilkington of the U.K. at a time when the business is performing poorly. As a result, there has been little improvement in the level of interest bearing debt in relation to the company“s cash flow.