[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Thursday, 28 April, 2005, 10:27 GMT 11:27 UK
Japan's electronic firms squeezed
Toshiba fuel cell
New products, but no bonanza as profit margins are tight
Weak prices for digital gadgets and microchips have led to a mixed set of results from Japan's electronics giants Toshiba, Hitachi and Matsushita.

Toshiba's net profits rose nearly 60%, thanks to strong sales of laptop PCs and mobile phones.

But its memory chip business struggled, leading to an 11.3% drop in the group's core operating income.

Hitachi's net profits nearly trebled but core profits fell; only Matsushita saw gains in both net and core profits.

Price wars are taking a steep toll on the consumer electronics giants. All three firms issued cautious forecasts for the current year, echoing industry giant Sony's predictions on Wednesday. It too is being squeezed by weak chip prices.

Tough chip market

"We do believe that the chip market has already hit bottom, but a serious recovery is likely to come only in the second half of the year," said Toshiba Corporate Executive Vice President Sadazumi Ryu.

We originally took a conservative approach in assessing the impact of price decline... but the actual price erosion turned out to be bigger
Takashi Miyoshi, Hitachi

Toshiba posted net profits for the year to March 2005 of 46bn yen ($434m; 228m) compared with 28.2bn in the previous year. Sales grew 5% to 5.8 trillion yen. Operating profits were down by 19.8bn yen to 154.8bn yen.

It forecast a 9.8% rise in operating profits to 170bn yen in the current year to March 2006. This is likely to disappoint investors as it is about 7bn yen below analysts forecasts, according to a Reuters poll.

Hitachi has done well from its focus on liquid crystal displays and newer, high end products such as specialist chips for vehicle components.

Price pressures

Hitachi posted net profits of 51.5bn yen ($487m; 255m), almost three times the 15.9bn yen profit it made in the previous full year. Sales rose 5% to 9 trillion yen.

But it too has suffered from pricing pressures, and trimmed its operating profit forecast for the current year by 100bn yen to 300bn yen.

"We originally took a conservative approach in assessing the impact of price declines. But the actual price erosion turned out to be bigger than that," said Takashi Miyoshi, a Hitachi senior vice president.

Matsushita said it got a boost from the Athens 2004 Olympics for sales key products such as flat screen TVs, digital cameras and DVD players. Chief financial officer Tetsuya Kawakami believes the first half of this year "should be tough".

Net profits climbed 39% to 58.8bn yen, and operating profit rose to 308.5bn yen from 195.5bn yen.

Lower prices to hit Sony profits
20 Jan 05 |  Business
Sony sees its profits rise by 15%
27 Apr 05 |  Business
Sony warning on Christmas sales
17 Sep 04 |  Business
Fujitsu sales and profits decline
28 Jan 05 |  Business
iPod sales fuel Apple profit leap
13 Apr 05 |  Business

The BBC is not responsible for the content of external internet sites


News Front Page | Africa | Americas | Asia-Pacific | Europe | Middle East | South Asia
UK | Business | Entertainment | Science/Nature | Technology | Health
Have Your Say | In Pictures | Week at a Glance | Country Profiles | In Depth | Programmes
Americas Africa Europe Middle East South Asia Asia Pacific