Sanyo Electric Co., struggling to recover earnings after a record annual loss, plans to cut 15 percent of its global workforce over 3 years and close factories as it focuses on its rechargeable battery business.
About 14,000 jobs will be eliminated worldwide, including 8,000 in Japan, from a workforce of more than 96,000. The Osaka-based company, the world's biggest maker of rechargeable batteries for consumer electronics, also plans to reduce costs by 70 billion yen (approx. U.S. $626 million) by March 2008.
Sanyo had a record 171 billion yen (approx. $1.5 billion) loss in the year ended March 31 as consumer-electronics prices fell and an earthquake damaged a semiconductor plant. The company in April brought in former journalist Tomoyo Nonaka as CEO to revive earnings and reverse the slump in the stock.
Sanyo expects operating profit margin to rise to 5 percent by March 2008 through its cost cuts, which include reducing the number of research projects by half and its factory floor space in Japan by 20 percent. The profit margin was 1.7 percent last fiscal year and is forecast to gain to 2.6 percent this year.
"We haven't set sales targets for fiscal 2007 but whatever those targets may be, if there are business units that look like they won't make the 5 percent margin, we will consider pulling out,'' said CFO Yoichiro Furuse.
In a 3-year corporate plan called "Think GAIA,'' Ms. Nonaka said the company will trim unprofitable businesses, and focus on rechargeable batteries, solar panels, medical technology, water- processing equipment, and other products pertaining to energy and the environment.
Sales of semiconductors, the company's third-biggest product behind phones and rechargeable batteries, dropped 17.4 percent to 216.8 billion yen (approx. $1.9 billion) last fiscal year. By contrast, revenue from solar cells, which account for just 1 percent of sales, rose 81.4 percent to 25.5 billion yen (approx. $228.1 million), leading all gains.
Sanyo, which is Japan's ninth-biggest chipmaker, plans to close a subsidiary in China that makes chips and liquid-crystal displays, according to a statement. Sanyo expects a loss of 92 billion yen (approx. $822.9 million) this business year, mostly because of costs to shed inventory, reduce capacity and cut jobs, it said in April. The company will spend about 24 billion yen (approx. $214.7 million) this fiscal year to cut 3,800 jobs, Mr. Furuse said. The company also said it will reduce interest-bearing debt by 600 billion yen (approx. $5.4 billion) by selling off fixed assets and real estate. (Bloomberg)
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