Shares of Asahi Glass Co, the world's third-largest glassmaker, soared yesterday after the Japanese firm said it would pull out of a joint venture in China making parts for traditional televisions, seeing the market's future in flat panel displays.
Asahi Glass said it would sell its entire 40 percent stake in the Chinese venture making glass for cathode-ray tubes for conventional television sets. It will sell the shares in Shanghai Asahi Electronic Glass Co to Chinese partner SVA Electron Co.
"The shift of TV and PC displays from cathode-ray tubes to flat-panel displays is accelerating and demand for cathode-ray tube glass is expected to continue to decrease," the company said in a statement late Thursday.
It did not disclose the terms of the sale but said the transaction would result in a loss of ?10 billion (US$84.5 million).
Due to the pullout and separate impairment losses in North America, Asahi Glass revised its net profit forecasts for this year to 41 billion yen from the earlier projection of ?76 billion.
But the company looked to the long-term benefits of exiting the unprofitable venture.
Asahi Glass shares gained 64 yen or 4.7 percent to close at 1,422 yesterday, far outpacing the 0.34 percent gains on the benchmark Nikkei-225 index.
Asahi Glass, under a plan launched last year, has stopped manufacturing glass for conventional television tubes in Japan, Indonesia and Taiwan and cut back in China, Singapore, South Korea and Thailand.
The market for flat-screen televisions is growing fast as customers demand higher image quality.
Electronics giant Matsushita Electric Industrial Co, announcing plans earlier this year to build the world's largest plasma panel plant, predicted the global flat-screen TV market would soar 60 percent this year to 45 million units.
Asahi Glass last year sold about ?455.9 billion of flat glass, used to make windows and windshields. The global market for so-called primary-manufactured flat glass is US$19 billion and for processed glass is US$56 billion, according to a presentation on the Web site of cross-town rival Nippon Sheet Glass Co.
The world's four-largest makers of flat glass -- Nippon Sheet Glass of Japan, Asahi Glass, Cie. de Saint-Gobain SA of France and Guardian Industries Corp of the US -- control more than 60 percent of the global market.
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