Jcr news release

JCR Affirmed BBB+/Stable and J-2 Rating on GS Yuasa
Corporation
Japan Credit Rating Agency, Ltd. (JCR) announces the following credit rating.
Rationale (1) GS Yuasa Corporation (the "Company") is a holding company established in 2004 through a merger between former Japan Storage Battery Co., Ltd. and former Yuasa Corporation. It handles automotive and motorcycle batteries as well as wide-ranging industrial batteries with diversified clients, mainly major manufacturers. It ranks top in Japan and third in the world for lead-acid batteries. The Company has focused on lead-acid batteries specifically designed for vehicles with idling stop systems as well as lithium-ion batteries for vehicles, as environment-friendly vehicles are becoming popular. Consolidated operating income in the current fiscal year ending this month are expected to be on a par with the previous year (17.6 billion yen) as one-time factors such as the flooding in Thailand will be offset by increasing demands for stationary batteries for restoration from the Great East Japan Earthquake and for data centers. (2) Having recently made investments to enlarge the production capacity for lithium-ion batteries for vehicles, the Company strives to lower business risks and investment burdens through cooperation with main user companies. The Company aims at making this segment move into the black to post operating income in the year ending March 2014, and the earnings have so far been in line with this plan. Highly-sophisticated Ritto Plant will start full operation for increased output this spring. The market for lithium-ion batteries has plenty of room for growth, and the Company's products will likely be adopted for more vehicle models. On the other hand, this segment sees cost competition intensifying due to entries of newcomers. JCR will monitor the progress of the capacity expansion for this segment including Ritto Plant as well as cost reduction. (3) Batteries for domestic industries, overseas operation and other existing businesses show more stable earnings than before. JCR sees the Company can maintain stable earnings over the medium term as these existing businesses will cover lithium-ion batteries for vehicles until this product becomes profitable. Investments to be implemented through the year ending March 2016 to expand capacity of lithium-ion batteries for vehicles will be covered by cash flows from the existing businesses, according to the Company's plan. Accordingly, a negative free cash flow is not likely to persist over the medium term, and the Company will likely maintain the current financial structure. JCR will focus on the capacity expansion and steps toward profits for lithium-ion batteries for vehicles, as well as the improvement of cash flow generating ability of the existing businesses. Rating Issuer: GS Yuasa Corporation (security code: 6674) Senior debts: BBB+ Outlook: Stable CP: J-2 Outline of methodology for determination of the credit rating is shown as "JCR's Rating Methodology" (December 14, 2007) and "Automakers and Auto Parts Manufacturers" (July 13, 2011) in Rating Policies on JCR's home page Jiji Press Building, 5-15-8 Ginza, Chuo-ku, Tokyo 104-0061, Japan Tel. +81 3 3544 7013, Fax. +81 3 3544 7026 Information herein has been obtained by JCR from the issuers and other sources believed to be accurate and reliable. However, because of the possibility of human or mechanical error as well as other factors, JCR makes no representation or warranty, express or implied, as to accuracy, results, adequacy, timeliness, completeness or merchantability, or fitness for any particular purpose, with respect to any such information, and is not responsible for any errors or omissions, or for results obtained from the use of such information. Under no circumstances will JCR be liable for any special, indirect, incidental or consequential damages of any kind caused by the use of any such information, including but not limited to, lost opportunity or lost money, whether in contract, tort, strict liability or otherwise, and whether such damages are foreseeable or unforeseeable. JCR’s ratings and credit assessments are statements of JCR’s current and comprehensive opinion regarding redemption possibility, etc. of financial obligations assumed by the issuers or financial products, and not statements of opinion regarding any risk other than credit risk, such as market liquidity risk or price fluctuation risk. JCR’s ratings and credit assessments are statements of opinion, and not statements of fact as to credit risk decisions or recommendations regarding decisions to purchase, sell or hold any securities such as individual bonds or commercial paper. The ratings and credit assessments may be changed, suspended or withdrawn as a result of changes in or unavailability of information as well as other factors. JCR retains all rights pertaining to this document, including JCR’s rating data. Any reproduction, adaptation, alteration, etc. of this document, including such rating data, is prohibited, whether or not wholly or partly, without prior consent of JCR. Copyright Japan Credit Rating Agency, Ltd. All rights reserved.

Source: http://www.jcr.co.jp/release/pdfen/11d1027GSYen.pdf