Moody’s revises Daikin view to stable

Moody's Japan K.K. said it changed Daikin Industries, Ltd.'s rating outlook to stable from negative.

All of Daikin's existing ratings, including its A3 long-term issuer rating, were affirmed.

Moody’s said the change in outlook was prompted by Daikin's demonstration of earnings growth over the last 12-18 months, and Moody's expectations that debt leverage will continue to decrease.

Debt/EBITDA had decreased to 3.1x at March 31 from 5.0x at Dec. 31, 2013 when Daikin acquired Goodman Global Group Inc. Debt/EBITDA is now at pre-acquisition levels.

"We attribute the deleveraging to earnings growth, which has increased partly because of incremental earnings from Goodman and the benefits of the yen's depreciation," Moody's assistant vice president and analyst Mariko Semetko said in a news release.

Further support has come from price increases, cost reductions, and sales growth in the existing businesses.

"We expect Daikin's EBITDA will continue to grow, particularly as the company further grows in China, while continuing to reduce cost globally," Semetko added in the release.

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