05 December 2012 08:20 [Source: ICIS news]
SINGAPORE (ICIS)--Moody's has downgraded its long-term issuer rating for Cosmo Oil to “Ba 1” from “Baa3” with a negative outlook, citing the declining profits of the Japanese refiner, the ratings firm said on Wednesday.
“The rating action reflects Moody's concern that the improvement in Cosmo Oil's balance sheet structure will take much longer than expected, given the persistent erosion in profitability, it said in a statement.
The move concludes Moody’s review of the company for a possible ratings downgrade that was initiated in August.
Operations at Cosmo Oil’s 220,000 bbl/day Chiba refinery – which was gradually returning to normal operations after incurring damages due to the March 2011 earthquake in Japan – were suspended again in June this year after an asphalt leak, Moody’s said.
“As a result, Cosmo Oil has incurred additional costs and losses, given the costs related to providing alternative supplies to its customers and a decrease in the volume of exports. These factors have negatively affected profitability,” it said.
Cosmo Oil plans to gradually restart the Chiba refinery in January next year. The refinery accounts for 40% of Cosmo Oil's total domestic production of refined products, in terms of volume.
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