S&P upgrades Tomen

Standard & Poor's said it raised its long-term corporate credit rating on Tomen Corp. to CCC+ from CCC, reflecting the company's improving financial profile following a series of restructuring measures.

The outlook on the corporate credit rating is stable.

S&P said Tomen's financial profile has improved in line with the company's midterm corporate plan, ending March 2006. The company achieved most of its financial targets in fiscal 2003 (ended March 31, 2004), recording a net profit of ¥3.8 billion and reversing the loss of ¥67 billion in the previous year. Tomen has reduced its risk assets and its core operating profit is improving as a result of restructuring efforts, including withdrawal from unprofitable businesses.

The company has also made progress in debt reduction, lowering its net debt-to-equity ratio to 7x at March 2004 from 11x at March 2003.

Nevertheless, S&P said, the business environment remains difficult and Tomen may incur additional losses in disposing of problem assets. The company's capitalization remains weak, burdened by risk assets, such as investment securities and fixed assets. The quality of Tomen's capital is also low, given that preferred stock accounts for the majority of the company's capital and its proportion of deferred tax assets to capital is very high.

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