Japanese auto giant Toyota suffered a fresh setback on Friday when ratings agency Standard & Poor's said it had downgraded the carmaker to "AA-" from "AA" citing "weak profitability". The dropping of Toyota's long-term corporate credit and senior unsecured debt ratings comes as the world's biggest automaker attempts to rebuild a reputation damaged by millions of recalls world-wide over safety issues.
"Toyota's profitability has been recovering, but it is still weak and is improving at a slower pace than the profitability of its Japanese peers," Standard & Poor's said in a statement. The agency said it had lowered its long-term ratings on Toyota from "AA" because the automaker's profitability "in the next one to two years is unlikely to recover to a level appropriate for the rating". It added that Toyota's "profitability might remain under pressure from higher raw material prices and gasoline prices as well as the strong yen."