Japan: Asahi Breweries and Sapporo Holdings upgraded by Standard & Poor's

Standard & Poor's said on January 6 it has upgraded its long-term ratings on Asahi Breweries Ltd. and Sapporo Holdings Ltd., citing improved profitability in their alcoholic beverage businesses and continuous debt shrinking efforts, Kyodo News posted on February 6.

The U.S. credit-rating agency also revised its rating outlook on Kirin Brewery Co. to stable from negative after its strong business performance in the first three quarters of fiscal 2005.

The agency raised its long-term corporate credit rating on Asahi to A-minus from BBB-plus, and that on Sapporo to BB from BB-minus. The outlooks on the new ratings are stable. It assigned an AA-minus as Kirin's long-term rating.

S&P noted the rating or outlook on Asahi could be further revised upward if the company is able to diversify its businesses into nonalcoholic beverages and strengthen its cash flow generation.

On Sapporo, the agency said the company's profitability and cash flow will be affected by the probable future introduction of a large tax hike on low-alcohol beverages since the company relies heavily on its "Draft One" low-alcohol beverage for its earnings.

But this could be offset by beefing up Sapporo's position in the premium beer market and reinforcing its cash flow from the real estate business. Concerning Kirin, S&P said its diversified businesses of nonalcoholic beverages, pharmaceutical and agricultural products contribute to generate stable cash flow.

Moreover, Kirin's overseas group companies and nonalcoholic beverages businesses are performing well and support Kirin's group earnings at a time Japan's domestic liquor market is entering maturity, it said.

08 February, 2006