Standard & Poor’s Corp. has downgraded its long-term rating on major construction machinery manufacturer Komatsu Ltd. to BBB-minus from BBB, with a negative outlook.

The U.S. credit-rating agency cited “deterioration in the company’s credit profile as a result of its weakened profit-generating ability.”

S&P has also lowered its short-term ratings on Komatsu Finance America Inc. to A-3 from A-2.

“The substantial decline in construction machinery demand in Japan is likely to dampen the profitability of all industry players over the long term,” S&P credit analyst Junko Miyakawa said.

“It is uncertain whether Komatsu’s plans to cut costs, increase sales from peripheral businesses and enhance its overseas operations will lead to a meaningful recovery in the company’s profitability,” she stated in her report.

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