Three Toyota Motor Corp. suppliers have had the outlook on their long-term corporate credit ratings changed to negative by Standard & Poors Ratings Services.
The negative outlooks for Denso Corp., Toyota Industries Corp. and Aisin Seiki Co. Ltd. mean that, based on current information, any ratings change in the next six months to two years likely would be downward, an S&P spokeswoman said.
All three companies ratings remain well above investment grade.
Only three North American suppliers enjoy that distinction: Johnson Controls Inc., BorgWarner Inc. and Magna International Inc. S&P placed all three companies on "CreditWatch" in December. S&P might downgrade those ratings this month, the company said.
Toyotas weakening position and production cuts mean the three Toyota suppliers will have difficulty maintaining their level of profitability, S&P said in a statement. The Japanese yens recent appreciation and the global auto industry downturn also have put pressure on the suppliers profits, the statement said.
Last month Denso revised its forecasted net income for the fiscal year that ends March 31 from a 101 billion yen ($1.1 billion) profit to a 91 billion yen ($1 billion) loss. Toyota Industries in October downgraded its annual net income forecast from 53 billion yen ($584 million) to 40 billion yen ($441 million). Aisin Seiki has also decreased its income forecast, S&P said.
S&P is maintaining its investment grade ratings for all three companies. It rates Denso at AA+, nine steps above junk; Toyota Industries at AA, eight steps above junk; and Aisin Seiki at AA-, seven steps above junk.
S&P said the likelihood is small that the companies capital structures will take significant hits. And Toyota will give the suppliers extraordinary support because of their importance to the automakers business, S&P said.