Nissan Motor Co’s credit rating on S&P Global Ratings has downgraded a notch to junk BB+, citing weaker profitability and the Japanese automaker’s “unlikely” sales, the agency said in a statement.
S&P said in a statement on Tuesday that Nissan’s car unit will take longer than expected to recover from wobbly sales and production.
While Nissan has recovered from two years of losses and is sticking to its forecast for an operating profit of 360 billion yen ($2.7 billion) for the fiscal year that ends this month, the maker lacks new models to lure car buyers. A weaker yen has also helped boost take-home income, making up for production hurdles, but that is fading as the yen has strengthened this year.
Supply chain disruptions are likely to last longer. The agency said that rising costs, slower global economic growth, and higher interest rates mean the global auto industry could face challenging conditions in the next year or two.
S&P said the Japanese automaker’s outlook was stable, citing gradual improvement in profitability and the company’s conservative approach to financial planning.