|Related Fitch Ratings Content: Pandemic Progress Check: Asia-Pacific Consumer Technology
Fitch Ratings-London-30 October 2020: Fitch-rated consumer tech companies remain largely resilient against coronavirus-related disruptions, and are likely to maintain solid operating and financial profiles at least in the short term, says Fitch Ratings.
Operating performance fared better than our previous expectations in May 2020. This is because of the benefit from structural shifts in consumer and business behaviour towards digital transformation and migration to working-from-home practices, which offset weakness in other electronic products to some extent.
We believe that recovery will be uneven across the technology sub-sectors, depending on the resumption of more positive consumer sentiment in each market. A stronger rebound in demand is likely only after 2021 for most markets. However, continued improvement from 2021 will depend to a large extent on consumer and business confidence amid an ongoing lack of visibility over the evolution of the pandemic.
Among the consumer tech issuers, we view Panasonic Corporation (BBB-/Stable) as the most vulnerable to a prolonged spread of the pandemic. We expect that a substantial decline in sales will continue to weigh on operating results which are already weak. This should lead to a downgrade to below investment-grade If Panasonic’s funds flow from operations (FFO) leverage is sustained above 3.0x, together with a weaker-than-expected operating margin below 3.5%.
Fitch’s Special Report, “Pandemic Progress Check: Asia-Pacific Consumer Technology”, is available at MailScanner has detected a possible fraud attempt from “74n5c4m7.r.eu-west-1.awstrack.me” claiming to be www.fitchratings.com.
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