Moody’s Ratings has upgraded TDK Corporation’s issuer rating from Baa1 to A3 and revised the outlook to stable from positive, the agency announced Monday.
The upgrade reflects TDK’s diversified product portfolio and conservative financial policies, which Moody’s expects will support more stable profitability and keep leverage below 2.0x.
Shunsuke Kimura, a Moody’s analyst, said: “The upgrade to A3 reflects TDK’s diversified product portfolio, which will drive more stable profitability by benefiting from secular market trends.”
For the fiscal year ending March 2025, TDK posted record revenue and operating profit. Its EBITA margin stayed around 12% through June 2025, higher than Moody’s previous expectations. The agency expects TDK to maintain this profitability while reducing volatility over the next 12–18 months.
TDK’s Energy Application Products segment, which supplies small rechargeable batteries for smartphones, remains its largest contributor to revenue and profit. The company also benefits from rising demand for hard disk drive-related products, supported by global data center expansion. Restructuring efforts have restored profitability in HDD assemblies for the first time in three years.
While sales in the Passive Component segment have slowed due to weakness in the battery electric vehicle market, Moody’s sees the impact on overall earnings as limited. This segment is well-positioned to capture future demand in automotive powertrains and AI-related products over the next 2–3 years.
TDK’s three-year business plan through fiscal 2026 aims to fund capital expenditures and shareholder returns entirely through operating cash flow. Moody’s expects the company to maintain positive free cash flow and keep leverage under control.
The A3 rating reflects TDK’s technological expertise, strong position in global electronic components and small batteries, diversified business portfolio, and disciplined financial approach.
Moody’s said the rating could be upgraded if TDK improves profitability, reduces cyclicality, expands in medium-sized batteries, maintains an EBITA margin above 15%, and keeps debt/EBITDA below 1.5x. Conversely, a downgrade could happen if margins fall below 10% or debt/EBITDA rises above 2.0x, or if large debt-funded acquisitions or shareholder payouts increase leverage.
