The Wall Street Journal-20080206-Hitachi and Sanyo Post Big Gains
Return to: The_Wall_Street_Journal-20080206
Hitachi and Sanyo Post Big Gains
Full Text (433 words)TOKYO -- Fiscal third-quarter results from Japanese electronics makers Hitachi Ltd. and Sanyo Electric Co. showed their recovery efforts are picking up steam, but they may yet be derailed by the slowing global economy.
Both companies had strong results for the quarter ended in December and are looking to make a net profit in the current fiscal year ending in March, after deep losses last fiscal year.
But citing the slowing economy, Hitachi slashed its outlook amid overhaul costs in its television business and Sanyo stuck to a very conservative forecast.
Hitachi said its net profit grew nearly tenfold, to 12.5 billion yen ($117.1 million) from 1.26 billion yen a year earlier, helped by a continued recovery in its power-plant, hard-disk-drive and consumer- electronics businesses.
Hitachi said it will invest 30 billion yen in its TV operations, to consolidate manufacturing and make thinner sets to spur sagging sales, which have been pressured by the subprime-mortgage crisis.
The company cut its net-profit forecast for the fiscal year to 10 billion yen from 40 billion yen.
"We initially tried to respond to expected demand for large-size television sets in the U.S., but as growth of the housing market wanes, I guess people are not replacing their TVs," said Toyoaki Nakamura, senior vice president and chief financial officer at Hitachi.
Sanyo reported net profit of 12.8 billion yen for the third quarter, after a 7.3 billion yen loss a year earlier, when restructuring charges blunted its performance.
The company is slowly regaining its financial health under the guidance of Goldman Sachs Group Inc. and other large investors.
Osaka-based Sanyo raised its operating-profit target for the fiscal year to 55 billion yen from 50 billion yen on the strength of strong nonbrand digital-camera and battery sales as well as lower costs.
But it declined to raise its net-profit target for the fiscal year from 20 billion yen, despite having booked 28.8 billion yen for the first nine months of the year.
"I actually think we can go a little higher" in net profit for the full year, said Executive Vice President Koichi Maeda.
He said the "conservative" forecast stemmed from fears that export- heavy Sanyo could see its results suffer if the U.S. dollar slides below 105 yen on a continued U.S. slowdown.
The company generates more than 60% of its revenue from overseas.
Sanyo said it was weighed down by its mobile-phone, refrigerator and air-conditioner businesses in the quarter.
The company is due to sell off its mobile-phone operations to Kyocera Corp. in April.
---
Ayai Tomisawa, Kenneth Maxwell and Kazuhiro Shimamura contributed to this article.
