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Sanyo in loss, to cut 14,000 jobsPosted by Retirement on: 2005-09-28 07:21:20 in category:
Stocks & Securities [ Print | Permalink / 0 Comment(s) ] Tokyo, September 28: Struggling Japanese electronics maker Sanyo Electric Co Ltd widened its loss estimate for this business year and said it will accelerate job cuts, exit the DVD player business and close some plants. Sanyo boosted its net loss forecast for the year to next March to 140 billion yen from 92 billion yen, citing sliding prices of electronics products and the lingering effect of earthquake damage to a chip factory in 2004. Following the announcement, Standard & Poor's placed Sanyo's debt ratings on CreditWatch with negative implications and said any downgrade could be more than one notch. Japan's third-largest consumer electronics maker unveiled a three-year restructuring plan in July under which it vowed to cut 14,000 jobs, or about 15 per cent of its global work force, shutter plants and halve its 1.2 trillion yen debt. But its earnings have since worsened, forcing it to redouble its efforts, company executives said. The Osaka-based firm now expects to complete two-thirds of the job cuts by January, will quit the DVD player/recorder and VCR business, and is in talks to cut its stake in its finance unit to earn cash and reduce group debt. "We are accelerating our reform efforts to recover from this severe earnings downturn. We must act quickly to dispose of the things we no longer need," Sanyo president Toshimasa Iue told a news conference in Osaka and televised in Tokyo. Sanyo also plans to close a factory in Hyogo prefecture, western Japan, where it began operations in 1947 and shutter a semiconductor factory in Gunma prefecture, central Japan, by the end of next March. The plant in Hyogo used to produce household appliances but halted production a couple of years ago. Several Japanese consumer electronics makers have launched major restructuring amid intense price competition on televisions and other digital products. Last week Sony Corp said it would cut 10,000 more jobs than it had already planned. Sanyo's shares closed down 1.95 per cent at 301 yen ahead of the announcement, although parts of the revised restructuring plan were reported earlier by domestic media. It underperformed the market's electrical machinery index IELEC, which gained 0.85 per cent. "Sony and Sanyo are coming up with more aggressive restructuring. But investors are now buying companies that can post strong growth without restructuring," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management. FINANCE UNIT S&P also took a negative view. "The revised forecast indicates a recovery in profit has been delayed and negative pressure on its financial standing will be larger than expected, raising concerns over deterioration in Sanyo Electric's ability to service debt solely through internal cash flow," S&P credit analyst Katsuyuki Nakai said in a release. Sanyo said it aims to cut 170 billion yen in costs over three years by streamlining purchasing, distribution and production. That is about 7 percent of its estimate for group revenues of 2.44 trillion yen this financial year. While downsizing its semiconductor and home appliances divisions, Sanyo plans to shift resources to more promising areas such as rechargeable batteries and industrial-use air conditioners where it still earns healthy profits. Despite the accelerated job cuts, Sanyo said it had not changed its estimate of 90 billion yen for restructuring charges in this business year, meaning the downward revision only reflects a deterioration of core earnings. Sanyo said it now expected to post a group operating loss of 5 billion yen in the April-September first half, reversing a previous forecast for a 9 billion yen profit. It cut its forecast for full-year operating profit by 72 per cent to 18 billion yen. Sanyo posted an operating profit of 42 billion yen and a net loss of 171.54 billion yen in the year ended March 31, hammered by earthquake damage to a chip factory and sluggish sales of core products such as digital cameras and mobile phones. Sanyo said it is in talks with another company about a possible tie-up involving Sanyo Electric Credit Co. Analysts have speculated that Sanyo would look to unload part of its 52.36 per cent stake in Sanyo Electric Credit Co, thereby removing the finance unit from the group. The unit generates healthy cash flow but adds more than 300 billion yen in debt to Sanyo's strained balance sheet. Homepage Other community sites http://www.business-business.biz Please support our sponsors: To design your custom retirement plan. http://www.retirement-plan.us For planning IRA rollovers. http://www.ira-rollover.us Professional asset allocation and the wonders it can do. http://www.asset-allocation.us Professional money management- Nationally ranked performance. http://www.roth-ira.us Managers selected to fit your needs. http://www.money-managers.us |
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