Friday, November 1, 2013
Worst May Be Over For Electronics Blue Chips
TOKYO (Nikkei)--Panasonic raised its profit outlook Thursday for the current fiscal year, providing further evidence that, by and large, earnings at Japan's big electronics makers are on the mend.
The combined operating profit of the industry's eight leading lights is expected to climb to around 70% of a high reached in fiscal 2007.
That banner year was followed by a money-losing fiscal 2008, which saw global demand for consumer electronics evaporate amid a financial crisis. After that, the industry suffered market share losses to foreign rivals, a devastating earthquake in Japan and punishingly high exchange rates. The wind is now at its back, with domestic and overseas economies recovering and the yen trading lower.
- Panasonic's Tsuga breaks down the numbers.
Panasonic Corp. (6752) now expects operating profit to climb 68% to 270 billion yen in the fiscal year ending March 31. It sees net profit coming in at 100 billion yen, compared with a year-earlier loss of 754.2 billion yen. This would be its first bottom-line profit in three years.
Panasonic has pressed ahead with its restructuring, which has included jettisoning noncore operations. Meanwhile, sales of residential and automotive electronics are growing.
"I feel that we are making progress toward a shift in our business structure," President Kazuhiro Tsuga said. "Starting in the second half, we're going to step up preparations for our growth strategy."
Panasonic reported a 68% jump in operating profit for the April-September half and a net profit of 169.3 billion yen. But it expects another wave of restructuring charges to push its bottom line back into the red in the second half. These stem partly from the company's decisions to stop making plasma television panels and to end its consumer smartphone business in Japan. Moreover, its operating profit upgrade owes much to a weak yen.
Sony Corp. (6758) cut its full-year profit outlook Thursday. It now sees operating profit falling 26% to 170 billion yen. While consumer electronics turned their first operating profit in three years in the April-September half, the company has little reason for optimism for most product lines.
Sharp Corp. (6753) reported a 33.8 billion yen first-half operating profit, but this owed largely to streamlining panel production, rather than genuine growth.
Among the industry heavyweights that had already announced interim results, Hitachi Ltd. (6501) expects its full-year operating profit to reach 500 billion yen -- near an all-time high. Toshiba Corp. (6502) raised its forecast to 290 billion yen, moving closer to its own best.
Both conglomerates have pursued structural reforms, lopping off underperforming segments in some cases. This has helped their earnings recover, and now the momentum is starting to come more from revenue growth in their particular strong suits -- railways and other infrastructure at Hitachi, semiconductor memory at Toshiba. Making this transition remains a challenge for the industry, as well as other sectors.
(The Nikkei, Nov. 1 morning edition)