By k on August 20, 2009

Tokyo, August 20, 2009 -- Moody's Investors Service says fiscal-year,
first-quarter results for Japan's export-related issuers show signs of
stabilization but that challenges remain.

A recently published comment by Moody's notes that FY 1Q09 results
through June for Japan's major automakers, consumer-electronics firms,
steel producers, and chemical companies are broadly in line with the
rating agency's expectations of a significant decline in sales and
profitability on a yearly basis. However, the report points to
improvements from the previous quarter.

Shinsuke Tanimoto, the lead author of the publication and a Senior Vice
President at Moody's, says, "Better quarterly results come mainly from
cost reductions, lower prices for raw materials, improved capacity
utilization, and a slightly depreciated Japanese yen." He adds, "The
government's incentive programs have helped domestic demand recover for
retail products such as automobiles and consumer electronics."

Tanimoto says, "Exporters of cars and consumer electronics reduced their
production in the second half of the fiscal year ending March 2009 to
draw down inventories on hand and at distributors." He adds, "Domestic
steel and chemical manufacturers, which supply part of their output to
such exporters, have also experienced decreased demand."

Nevertheless, the report notes a recent, incipient recovery and explains
that, since the deep trough earlier this year, inventory levels have
risen, and thereby contributed to a recovery in capacity utilization at
manufacturing plants.

Tanimoto says, "While the fiscal year's first quarter showed an
improvement in companies' financial profiles—or at least a reduction in
earlier, sharp declines—we remain cautious about the likelihood of
sustained improvements in profitability and a consequent stabilization of
ratings."

He concludes, "Any positive movement in our ratings will require evidence
of at least several of the following factors: (1) a sustained recovery in
global consumption--not just from demand generated by governments'
initiatives; (2) improvements in the competitive climate, (3)
implementation of restructuring measures that appropriately recalibrate
production to lower demand, (4) restoration of impaired balance sheets,
and (5) a favorable trend in Japan's foreign-exchange rate.

The new report, entitled, "FY 1Q09 Results for Japan's Export-Related
Issuers: Still a long way to go" is available at www.moodys.com.

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