TOKYO -- Moody's Investors Service on March 14 changed the outlook for Omron Corp's A2 issuer rating to negative from stable.
Due to Japan's prolonged domestic economic downturn, Omron has been experiencing a decline in sales and margins in its key control component system products.
Moody's also cited depressed capital spending in public transportation systems and ATMs at financial institutions, combined with pricing pressure.
According to the Nilson Report, Omron shipped 4,785 ATMs in Japan in 2000, an 11 percent increase over 1999, and 3,730 ATMs elsewhere in Asia, an 82 percent increase. Shipment figures for 2001 have not yet been released.
According to Moody's, Omron has been implementing extensive restructuring measures, including personnel cuts, shifting production overseas and revamping unprofitable businesses.
Moody's believes that these restructuring measures will contribute to earnings improvement. Also, Omron's solid financial profile should help it weather the current downturn. However, Moody's is concerned that given the potential for further deterioration in the business climate, there may be a delay in material improvement in Omron's profitability and cash flow.
Headquartered in Kyoto, Japan, Omron is the largest control components and systems manufacturer in Japan. It also manufactures and sells EFT systems, open systems, health-care and medical equipment, and public information and traffic control systems.
