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Wed, Jul 29, 2009 - Page 10 News List

Hitachi books US$868 million in net losses for Q2

AP AND AFP , TOKYO

A man cycles past Hitachi’s headquarters in Tokyo, Japan, on May 7. Hitachi plans to take over five of its units through a tender offer.

PHOTO: BLOOMBERG

Hitachi Ltd yesterday posted a group net loss of ¥82.67 billion (US$868 million) for the second quarter, dragged deep into the red by persistent weak demand for its electronics products.

Hitachi, which produces everything from home appliances to medical equipment to nuclear reactors, had net profit of ¥31.6 billion during the same period a year earlier.

The company made headlines three months ago for booking a fiscal year loss of ¥787.3 billion — the biggest ever annual loss by a Japanese manufacturer.

The company also announced plans to take over five publicly traded units through a tender offer.

The Tokyo-based company will acquire the outstanding shares of Hitachi Maxwell Ltd, Hitachi Information Systems Ltd, Hitachi Systems & Services Ltd, Hitachi Software Engineering Co and Hitachi Plant Technologies Ltd.

Analysts said the takeovers would do little to change their bearish opinion on the company’s outlook.

“The market consensus is that Hitachi needs to boost its capital, but there are no signs of measures to sell off non-core businesses that could provide a cash inflow, and ... its funding needs are set to swell,” Hideyuki Maekawa, an analyst at Credit Suisse, wrote in a note to clients.

Credit Suisse has pegged Hitachi shares with its lowest “underperform” rating.

Hitachi’s revenue for the three months through June 30 retreated 26 percent to ¥1.89 trillion, the company said.

It booked of ¥50.6 billion in operating losses — a measure of core business — compared with ¥77.7 billion operating profit last year.

For the full fiscal year through next March, Hitachi continues to expect a ¥270 billion net loss on sales of of ¥8.9 trillion.

Separately, Canon Inc said yesterday its net profit tumbled 84.5 percent year-on-year in the first half of the year, hit by sluggish sales of compact digital cameras and other electronics.

The yen’s strength against other currencies also ate into profits at Canon, which relies heavily on consumers in overseas markets for sales.

The photographic and office equipment maker said net profit plunged to of ¥33.35 billion in the six months through last month — the first half of its business year — from 214.49 billion in the same period last year.

Operating profit slumped 80.4 percent to ¥64.94 billion as revenue decreased 29.9 percent to ¥1.48 trillion, the company said in a statement.

Canon has enjoyed strong sales of high-end digital single-lens reflex (SLR) cameras in recent years, but it has not been immune to the global economic downturn, which has battered Japanese electronics makers.

For the whole of the year, Canon left its net profit forecast unchanged at ¥110 billion.

It raised its operating profit projection to ¥190 billion from ¥180 billion, but trimmed its revenue goal to ¥3.32 trillion from ¥3.33 trillion.

“Demand for inkjet printers and compact digital cameras is expected to remain stagnant for the time being due to the drop in consumer sentiment resulting from the weak economy, whereas demand for digital SLR cameras is expected to remain strong,” the statement said.

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