‘Cash Burn’ Risks Japan Manufacturers, Goldman Says

By Masaki Kondo

Feb. 20 (Bloomberg) -- Kobe Steel Ltd., Yamaha Motor Co., and Mitsubishi Heavy Industries Ltd. are among Japanese companies that may have to raise capital as cash runs short, Goldman Sachs Group Inc. said.

“These companies may need to raise cash soon, though we would expect them to access debt, rather than equity markets,” Rajeev Das and three other analysts at Goldman Sachs wrote in a report dated yesterday. “Given the risks attached to financing or raising the debt portion,” their plans to raise capital would hurt shareholder value, said the analysts, who recommended selling the shares.

Kobe may run out of cash within 153 days, should it continue to spend at the same pace as the third quarter, the analysts said. Mitsubishi Heavy may be short of cash within 217 days, while Yamaha needs extra funds within 386 days, the analysts wrote.

Also included in Goldman’s “cash-burn” list are Sumitomo Metal Industries Ltd., Komatsu Ltd., Hitachi Construction Machinery Co., Nippon Steel Corp. and Suzuki Motor Corp. The list is limited to the auto, machinery, plant-engineering and steel sectors.

To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.