Hitachi hikes loss forecast by ¥88 billion

by Hiroko Nakata

Hitachi Ltd. said Thursday it expects a record group net loss of ¥788 billion for the business year that ended in March, worse than its previous forecast of ¥700 billion.

Hitachi, an all-around electronics maker ranging from home appliances to nuclear reactors, lowered its already grim forecast because the harsh business environment has prompted it to write down more deferred tax assets.

“We can’t be optimistic about the world economy for fiscal 2009,” Hitachi Executive Vice President Takashi Miyoshi told a news conference.

Hitachi meanwhile also said it now expects a ¥127 billion group operating profit for the year, more than its previous forecast, made Feb. 3, of a ¥40 billion profit due to improvement in its power plant sector and business for materials used for cables and electric wires.

The electronics conglomerate will pay ¥175 billion more in corporate taxes for the business year.

The better operating profit, however, will be offset by the expected tax-related costs. It also expects ¥10 trillion in sales for the year, against the previous forecast of ¥10.02 trillion.

The company will formally announce its earnings results Tuesday.

Miyoshi said Hitachi’s business forecast remains dim despite its restructuring efforts.

“The outlook for auto-related and consumer electronics business remains severe, so we will reorganize our business structure thoroughly,” he said.

Hitachi has already announced it will slash 7,000 jobs, or nearly 2 percent of its global workforce. Despite the downsizing, the global downturn and the yen’s appreciation have eroded overseas profit.

The company has also announced changes in its battered semiconductor business. Renesas Technology Corp., a joint venture with Mitsubishi Electric Corp., will merge with NEC Electronics Corp. by next April to create the country’s largest chip maker, the companies said last month.

Asked about this business year for Hitachi, Miyoshi said: “Our outlook for the first and the second quarters of fiscal 2009 will be very tough. But we can hope for the yearend and the fourth quarter.”

On taking public funds through a government revitalization program, Miyoshi said Hitachi’s group companies, including in the semiconductor sector, are likely to apply, but Hitachi as a parent company won’t.