S&P upgrades Hitachi outlook on stronger competitiveness

S&P Global Ratings has upgraded its outlook on Hitachi Ltd. to positive, maintaining its A long-term and A-1 short-term issuer credit ratings. The agency cites Hitachi's growing competitiveness, driven by its ability to form a business portfolio that can capitalize on long-term growth opportunities and cross-sectoral IT services deployment.

S&P expects Hitachi to sustain favorable financial ratios through enhanced cash flow generation and disciplined financial management, while increasing investments and shareholder returns. The company's EBITDA margin is forecasted to improve to the mid or upper 16% range over the next one to two years, up from 15.6% in fiscal 2025.

Hitachi is focusing on social infrastructure and IT services, where it predicts structural demand will increase. The company aims to maintain a debt-to-EBITDA ratio around 1.0x, and may see further upgrades if the margin stays above 16% and debt-to-EBITDA ratio remains below 1.5x. Hitachi recently divested several businesses, including its automotive parts, construction machinery, and overseas air conditioning divisions, to streamline its operations.