Print

Mail

wiki links

Sanyo investmentscut by 26 percent on slowing demand

Sanyo Electric Co, the world's No. 1 maker of digital cameras, invested about 26 percent less than planned in the fiscal first quarter on concern a slowing US economy may limit demand for consumer electronics.

Sanyo spent about ?20 billion (US$167 million) out of the ?27 billion yen planned on new plants and equipment for the three months ended June 30, Sunao Okubo, Sanyo's executive finance officer, said in an interview. The company set aside ?55 billion for the first half.

Japanese manufacturers are worried this year's surge in sales of televisions and other devices, driven by the World Cup soccer tournament, may not last as a plunge in US stocks wrecks consumer confidence. The yen's 6 percent gain against the dollar in the past three months also threatens earnings, especially at exporters such as Sanyo, which gets about half its sales abroad.

"The anxiety about uncertainty is heightening," said Kazuaki Otsuka, who helps manage about ?4 billion in Japanese equities at ING Mutual Funds Management Co (Japan) Ltd, which holds Sanyo shares.

"We don't see a driving force for growth. It would be difficult to expect a strong economic recovery."

outlook uncertain

In the US, the Standard & Poor's 500 stock index fell 8 percent last month and is down 21 percent since the start of the year. Economic growth slowed in the second quarter to a 1.1 percent annual rate from a 5 percent pace in the first three months of the year, and the third quarter may not be better.

"The outlook is uncertain," Okubo said.

"These kinds of concerns affect our investments in new plants and equipment."

Sanyo shares fell ?17, or 3.6 percent, to 458 at the close of trading on Japanese stock exchanges. The shares have fallen 26 percent this year.

The Osaka-based company, which is also the world's biggest maker of mobile-phone batteries, last month reported a 2.6 percent gain in first-quarter group operating profit to ?14.9 billion on higher sales of flat panels and digital cameras.

Net income fell 9.8 percent to ?3.6 billion in the three months ended June 30 because of changes in tax laws.

Of Sanyo's five major divisions, only the home appliances unit had a loss in the first quarter.

The division's operating loss widened almost seven-fold from the year ago period to ?1.67 billion. The other divisions -- audio-visual and communications equipment, industrial machines, electronic components, and batteries -- reported an operating profit.

Operating profit is sales minus materials, administration and marketing costs.
This story has been viewed 1911 times.