Moody’s upgrades Sumitomo Chem rating to A2

27 September 2007 03:58  [Source: ICIS news]

SINGAPORE (ICIS news)--Moody’s Investors Service said on Thursday that it had upgraded ratings for Sumitomo Chemical and subsidiary, Sumitomo Chemical UK, as the company’s profit structure was being strengthened and stabilised.

Sumitomo’s senior unsecured debt rating and issuer rating was upgraded to A2 from A3, with a stable outlook, the ratings agency said in a statement.

The ratings change reflects the agency’s view that the Japanese chemical major will fortify earnings growth, and reduce dependence on the petrochemicals and basic chemicals business cycle, it said.

Sumitomo’s diverse portfolio, designed to maintain earnings growth through the economic cycle, should help to strengthen company fundamentals and ensure sustainable growth, Moody’s added.

The company has been especially focusing on reinforcing competitiveness in IT-related materials and life science products, expanding capacity of LCD-related components over the years.

Sumitomo also plans to make Sumitomo Chemical Takeda Agro a wholly owned subsidiary in November 2007. 

Moody’s said that Sumitomo’s financial profile remained healthy, despite aggressive investments, such as Sumitomo’s 50:50 $9.8bn (€13.8bn) joint venture refining and petrochemical project with Saudi Aramco in Rabigh, Saudi Arabia. 

Sumitomo’s debt/capitalization ratio for FYE3/2007 was 40.9%, and is expected to be at its highest at the end of March 2009, but should fall under 50% in FYE3/2009, the ratings firm said.

The project is unlikely to drag significantly on the company’s balance sheet structure, and is expected to be highly competitive. Its successful completion is likely to improve the company’s global competitiveness, Moody’s said.

($1= €0.71)

By: Joyce Khoo
+65 6780 4359

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