Toshiba Corp.

S&P Global Ratings acknowledges a high degree of uncertainty about the evolution of the coronavirus pandemic. The consensus among health experts is that the pandemic may now be at, or near, its peak in some regions but will remain a threat until a vaccine or effective treatment is widely available, which may not occur until the second half of 2021. We are using this assumption in assessing the economic and credit implications associated with the pandemic (see our research here: www.spglobal.com/ratings). As the situation evolves, we will update our assumptions and estimates accordingly. The positive outlook reflects our view that, despite the likely continued difficult market conditions amid the COVID-19 pandemic and stiff competition, Toshiba will continue to reduce costs

...Toshiba's profitability is likely to remain stable in the next one to two years, supported by the effects of cost reductions and business restructuring, in our view. In S&P Global Ratings' estimates, Japan-based capital goods and diversified electronics company Toshiba Corp.'s EBITDA margin significantly recovered to about 8% in fiscal 2019 (ended March 31, 2020). It declined to 4.5% in fiscal 2018 on one-time factors. The financial performance of Toshiba's hardware business, which deals in products such as storage and printers, will likely substantially deteriorate in fiscal 2020 because of the global economic downturn triggered by the COVID-19 pandemic, in our view. However, we expect the company's EBITDA margin to remain broadly stable at about 7%-8% in the next year or two. We base this on our view that the effects of various cost reduction measures, which Toshiba launched fully in fiscal 2019, are likely to offset the deterioration in its financial performance to some extent....

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