Standard & Poor’s ‘B+’ Rating Affirmed for Giti Tire

Standard & Poor’s Ratings Services said it has affirmed Giti Tire’s “B+” long-term corporate credit rating with a “negative” outlook, based upon the company’s weak financials going into 2009. It also affirmed Giti’s “B-” foreign-currency issue rating on the company’s unsecured notes. Furthermore, Standard & Poor’s says all Giti’s ratings have been removed from CreditWatch, where they had been placed with “negative implications” in September.

“The negative outlook reflects our expectation that Giti’s financial metrics may remain weakened in 2009 and that they may become inadequate to support the current rating,” Standard & Poor’s analyst Bei Fu in a XFN-Asia news service release. “The increased (raw material) costs, coupled with the inability of the majority of tyre manufacturers to fully pass these on to customers in a timely manner, have compressed margins and highlights the industry risk.”

“Giti needs to achieve ongoing sales growth while maintaining its operating margin to improve its profitability in 2009,” she added.