S&P: Mitsubishi Motors on positive watch

Standard & Poor's said it placed its CCC+ long-term corporate credit and senior unsecured debt ratings on Mitsubishi Motors Corp. on CreditWatch with positive implications, reflecting progress in the company's efforts to revitalize and improve its profitability, as well as reduced downside risks.

"Although the pace of improvement in profitability is within expectations, uncertainties over progress and downside risk in performance are likely to have decreased compared with earlier this year," said S&P credit analyst Chizuko Satsukawa.

"The recent dissolution of a capital tie-up with DaimlerChrysler AG and Mitsubishi Heavy Industries Ltd. converting Mitsubishi Motors into an equity-method affiliate, have already been incorporated into the rating and are not directly related to the CreditWatch placement."

The agency noted in the first half of fiscal 2005 ended Sept. 30, Mitsubishi Motors substantially reduced its losses and recorded unit sales slightly higher than planned despite initial concerns about a drop in unit sales.

On the other hand, S&P added concerns remain over the company's financial profile, which may weaken as free cash flow, albeit improved, remains negative.

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