Hitachi reports quarterly loss amid global slump

[February 03, 2009]  TOKYO (AP) -- Hitachi reported a 371 billion yen ($4.14 billion) net loss for the fiscal third quarter Tuesday as a global slump squelched demand, and confirmed that it expects its worst ever full-year loss.

Hitachi Ltd., which makes everything from home appliances to medical equipment, stuck to its forecast given last month for a 700 billion yen ($7.8 billion) net loss for the fiscal year through March, a stark reversal from the 15 billion yen profit it projected in October.

That would be the worst annual loss for a Japanese manufacturer, according to Shinko Research Institute Co. It would be the second-largest in Japanese corporate history after an 834.6 billion yen loss reported by telecommunications giant Nippon Telegraph and Telephone Corp. for the fiscal year ending March 2002, Shinko said.

Hitachi, which has already announced it will slash 7,000 jobs, or nearly 2 percent of its global work force, had a 12.5 billion yen profit for the October-December period the previous year. Quarterly sales fell 16 percent to 2.26 trillion yen from 2.71 trillion yen in 2007.

The Tokyo-based company said virtually every area in its sprawling business was battered by the global downturn. An appreciating yen, which erodes the value of overseas earnings, also hurt results, it said.

Demand fell sharply in a wide range of Hitachi's operations, including computer chips, software services, electric power systems, digital disks, auto parts and fine metals, the company said in a statement.

The U.S. financial crisis has caused ripple effects throughout the world economy, squelching demand not only in industrialized nations but also in China and other new markets, it said.

Although Hitachi has promised to scrap unprofitable sectors, review investments and close plants to cut costs, its sales prospects remain shaky. It is forecasting a 11 percent slide in sales for the fiscal year ending March 31 at 10.02 trillion yen.

"Our business conditions are increasingly murky as the fallout on financial markets from 'Lehman shock' fails to settle down, and the economies of the U.S. and emerging nations rapidly deteriorate," Hitachi said, referring to the collapse of Lehman Brothers last year.

Sales were down in all regions, on average by about 20 percent, including North America, Europe, Japan and the rest of Asia, according to Hitachi.

Other Japanese electronics makers are also reporting dismal results.

Sony's net profit shriveled to 10.4 billion yen in the third quarter, down 85 percent from a year earlier. Sony is also forecasting a 150 billion yen net loss for the full fiscal year, largely because of huge losses in its core electronics sector. The last -- and only -- time Sony reported a loss, for the fiscal year ending March 1995, the red ink came from one-time losses in its movie division, marred by box office flops and lax cost controls.

Toshiba Corp. reported a net loss of 121 billion yen for the October-December quarter, plummeting from the 80.5 billion yen profit it booked in the same period the previous year, as demand fell for flash memory chips and other gadgets. It expects a net loss of 280 billion yen for the fiscal year.

NEC Corp.'s net loss for October-December swelled to 130 billion yen ($1.46 billion) from 5.2 billion yen a year earlier, and is forecasting a net loss for the full year through March.

Nintendo Co., while faring relatively better because of its hit Wii and DS game machines, slashed its earnings estimate for the full fiscal year through March by 33 percent to 230 billion yen.

Hitachi shares, which plunged to a nearly 29-year low recently, were trading at 259 yen in Tokyo Tuesday, up 6.2 percent. Earnings results were announced shortly after trading ended.

[Associated Press; By YURI KAGEYAMA]

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