International credit rating agency Standard & Poor's has announced that it has lowered its long-term corporate rating for Japanese steelmaker Nippon Steel & Sumitomo Metal Corp. (NSSMC) to 'BBB' from 'BBB+', affirming the outlook as stable.
According to S&P's statement, the recovery in the company's earnings has slowed down due to low steel prices, reducing the likelihood of a quick improvement in the company's financial risk profile, which worsened when Nippon Steel Corp. and Sumitomo Metal Industries Ltd. merged in early October.
The stable outlook indicates the expectations that the earnings will improve in the financial year 2012-2013, once the benefits of the merger are observed, despite deteriorating business conditions.
The ratings agency believes that NSSMC is "likely to further reduce costs to cope with softening business conditions in Asia". The company aims to generate about JPY150 billion ($1.89 billion) a year as a benefit of integration by around the financial year 2015-16.