Japan's Toshiba profit dives 70%, cuts forecasts

Posted at 01/31/12 6:32 PM

TOKYO - Japan's Toshiba on Tuesday more than halved its net profit forecast for the year to March as it reported a 70% dive in nine-month earnings on a strong yen and weak digital product sales.

Group net profit came to 12.1 billion yen ($158 million) in the nine months to December, down 70% from a year earlier, and slipped into the red in the quarter ending December.

The firm slashed its full-year net profit forecast to 65 billion yen from 140 billion yen. That would represent a 52.8% drop from the previous year, instead of growth that the company had earlier expected.

The poor performance reflected "the impact of sharp yen appreciation, the March earthquake, the floods in Thailand and demand deterioration," said the firm, whose operations range from consumer electronics to nuclear power plants.

Group sales in the nine months ended December fell 6.8% to 4.35 trillion yen, with operating profit tumbling 36.2% to 90.78 billion yen.

Revenue fell due to lower sales in the digital products and electronic devices segments, which include liquid crystal display televisions and semiconductors, the company said in a statement.

Electronics manufacturers worldwide are struggling to profit from making TVs amid fierce price competition in the overcrowded, low-margin market.

Japanese firms were also hit hard by sluggish TV demand at home, after record sales last fiscal year thanks to a temporary subsidy as the country shifted to digital terrestrial broadcasting from an analogue system.

The company said in November it would shut three semiconductor factories in Japan and slow production at a number of other plants as part of a reorganisation of its business.

Toshiba downgraded its global TV sales target to 15 million units for the year to March, compared with a previous target of 18 million.

"The domestic TV market has slumped more than we had expected," Makoto Kubo, Toshiba executive vice president, told a press conference.

The fall more than offset Toshiba's expanding presence in emerging markets, he said.

A strong yen has also hurt the company's bottom line by making its exports less competitive in foreign markets.

Toshiba also cut its full-year sales forecast to 6.2 trillion yen from 7.0 trillion yen and operating profit to 200 billion yen from 300 billion yen.