- Household Products & Personal Care: The industry expects some volume losses as consumers empty their pantries or perhaps trade selectively into private-label items. For 2009, the focus is on top- and bottom-line impacts from the very rapid 10%-20% appreciation of the U.S. dollar against most major currencies in the past five weeks, balanced against an expected decline in commodity prices. Fitch expects that companies will manage discretionary spending to maintain the industry's generally strong credit ratings.
- Toys: The toy industry is undergoing a structural change where costs will be higher on a permanent basis going forward given that the bulk of the world's toy manufacturing is done in China. It is expected that toy manufacturers will continue to take price increases in 2009 where possible. Commodity costs are declining and should be an additional offsetting benefit to the sector by the end of the first quarter of 2009.
- Appliances, Home, Hardware and Tools: Credit protection metrics for this sector are trending negative. 2009 will be extremely difficult with expected declines in GDP in developed economies, sharply descending consumer spending in the U.S. and a lingering poor housing environment in many countries. In the U.S. residential investment is expected to be down roughly 25% in 2008 and fall again in 2009 by a similar magnitude. The continued weak housing market will affect sales of housing-related products, including appliances, cabinets, faucets and tools. There is a high potential for downward ratings migration in 2009.
