Japan-based Hitachi, Ltd. has announced its consolidated financial results for fiscal 2003, the year ended March 31, 2004.
Hitachi's consolidated net sales rose 5 percent year-on-year, to 8,632.4 billion yen (approx. U.S. $78.6 million). This came amid major year-on-year changes in the Information & Telecommunication Systems, Electronic Devices and Logistics, Services, and other segment that resulted from ongoing business portfolio realignment across the Hitachi Group. Operating income climbed 21 percent, to 184.8 billion yen (approx. $1.35 billion) with contributions coming from improved results in the Electronic Devices, High-Functional Materials & Components, and Financial Services segments.
Other income jumped 245 percent, to 161.1 billion yen (approx. $1.47 billion), despite lower interest income and dividends received. This increase was due to factors such as the sale of Nitto Denko Corporation shares. Other deductions increased 6 percent, to 108.8 billion yen (approx. $991.73 billion), which the company attributes partly to higher charges for structural reforms.
As a result, Hitachi recorded a 145-percent increase in income before income taxes and minority interests, to 237.1 billion yen (approx. $2.16 billion). After the deduction of 198.6 billion yen (approx. $1.8 billion) in income taxes, income before minority interests was 38.4 billion yen (approx. $350 million). Net income declined 43 percent, to 15.8 billion yen (approx. $144 million).
Net sales, operating income, income before income taxes and minority interests, and net income were all above the projections issued when Hitachi announced its financial results for the first half of fiscal 2003.
Sales for the company in Information & Telecommunication Systems, Digital Media & Consumer Products, and High-Functional Materials & Components were up year-on-year and Power & Industrial Systems sales were on a par with the previous fiscal year, while sales in other segments declined.
Electronic Devices, Digital Media & Consumer Products, High Functional Materials & Components, and Financial Services posted higher year-on-year earnings, while operating income declined in other segments. In Information & Telecommunication Systems, Electronic Devices, High-Functional Materials & Components, and Financial Services, operating income was above forecasts issued with Hitachi's first-half results, while operating income in other segments fell short of forecasts.
Total assets at March 31, 2004 decreased 589.0 billion yen (approx. $712 billion), to 9,590.3 billion yen (approx. $87.5 million), compared with the previous year-end. The company says this is due the transfer of most semiconductor operations to Renesas Technology in April 2003, a reduction in retirement, and severance benefits resulting from the transfer of the substitutional portion of employee pension fund liabilities to the Japanese government, among other factors.
Debt decreased 343.0 billion yen (approx. $3.1 billion), to 2,497.5 billion (approx. $22.78 million). Stockholders' equity increased 314.9 billion yen (approx. $2.87 billion) to 2,168.1 billion yen (approx. $19.77 billion) due partly to the transfer of the substitutional portion of employee pension fund liabilities to the Japanese government. As a result of these factors, the stockholders' equity ratio improved 4.4 points to 22.6 percent. The debt-to-equity ratio (including minority interests) improved by 0.25 of a point to 0.84.
Hitachi expects that the world economy will continue its strong growth in fiscal 2004. Underpinning this outlook is an expected rising demand for IT-related equipment, particularly in the U.S. and expansion of Asian economies supported by rising demand in China, as well as a modest economic recovery in Europe.
The Japanese economy is expected to also continue its modest recovery on the back of increasing exports, which are being fueled by the U.S. economic upswing and the strong Chinese economy, continuing strength in private-sector plant and equipment investment, and consumer spending, as income and employment prospects improve slightly.
Under these circumstances, Hitachi will push ahead with efforts to create new businesses and strengthen key businesses by capturing synergies in resource use across the Hitachi Group, guided by "i.e.HITACHI Plan II." The company will also focus on structural reforms to concentrate more resources on highly profitable businesses and on measures to improve its financial position.
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