Japanese electronics maker Hitachi Ltd. reported that its net profit surged by more than 10 times to 26.6 billion yen (approx. U.S. $256.8 million) in the third quarter to December.
But because of the downturn in demand for digital home appliances and falling prices of electronic devices, Hitachi said it has cut its net profit forecast for the full year to March to 50 billion yen (approx. $482.7 million) from 100 billion yen (approx. $965.4 million).
It similarly slashed its full-year pretax profit estimate to 235 billion yen (approx. $2.3 billion) from 300 billion (approx. $2.9 billion), operating profit to 260 billion (approx. $2.5 billion) from 300 billion (approx. $2.9 billion), and revenue to 8.84 trillion (approx. $85.4 billion) from 8.90 trillion (approx. $85.9 billion).
"Due to plunging prices of digital home appliances and electronic devices, we are now destined to fall short of the previous revenue and profit targets," said Takashi Miyoshi Hitachi senior managing director.
Hitachi said it will double restructuring charges to 40 billion yen (approx. $386.2 million) for the full year to March and double the write-offs to 30 billion yen (approx. $289.6 million).
"Although we cannot elaborate on the details right now, the funds will be spent on consolidating branches and plants as well as streamlining the labor force," said Mr. Miyoshi.
In the third quarter ended December, pretax profit grew 54 percent to 70.9 billion yen (approx. $684.5 million), as revenue increased 4 percent to 2.12 trillion yen (approx. $20.5 billion).
By segment, Hitachi posted operating profit of 2.3 billion yen (approx. $22.2 million) in the electronic devices division in the third quarter, down from 11.9 billion (approx. $114.9 million) a year earlier.
"While prices are now declining at a much faster-than-expected pace, sales volume of LCDs for use in cellular phone handsets also fell, whereas we had earlier projected a growth, and sales of LCDs for use in LCD TVs are not growing at a pace that we had earlier anticipated," Mr. Miyoshi said.
As prices of digital home appliances continued to plunge, the company incurred an operating loss of 1.8 billion yen (approx. $17.4 million) in its digital media/consumer electronics division in the third quarter, reversing the year-earlier profit of 11.4 billion (approx. $110 million). (AFX)
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