Hitachi Ltd. will post pretax losses of 100 billion yen in the 1998 business year to next March 31, marking its first plunge into red ink for the postwar period, company officials announced in revised earnings forecasts Thursday.
The major electric machinery manufacturer had earlier projected unconsolidated pretax profits of 30 billion yen for the 1998 business year.
In the throes of its deepest crisis, the electronics giant also announced a major restructuring plan that includes cutting 4,000 workers in the current business year and slashing fixed costs by 10 percent, or 140 billion yen, by the end of the next business year.
Hitachi attributed the huge losses to sharp price falls and shrinking demand for electronics this year, including 64-megabit dynamic random access memory chips.
The company also said its personal computer and multimedia-related sales suffered a severe setback. Although Hitachi President Tsutomu Kanai admitted Hitachi’s poor performance was due to the fact that it could not react fast enough to rapid changes in the market, he said that he would not immediately step down to take responsibility.
“I feel responsible as president … My greatest responsibility is to implement these restructuring measures and resuscitate the company without fail during the 1999 business year and the year after,” Kanai told a hastily convened news conference.
Hitachi’s unconsolidated sales projection for the current business year was also revised downward, to 3.75 trillion yen from 4 trillion yen, while its earlier forecast of 20 billion yen in net profits was revised to 260 billion yen in net losses.
Hitachi’s consolidated business results will also deteriorate, the forecast says.
In recent years, Hitachi has been restructuring its businesses through dissolving some joint venture companies and freezing production overseas, especially in its semiconductor sector.
The company said Thursday that it will speed up these restructuring efforts and add new measures. The firm will also aggressively implement a reorganization of Hitachi Group companies and promote alliances with firms outside of the group.
While the company will shift more employees to sectors in information systems and electronics technologies, it will cut 4,000 employees this year, mainly in its power systems and home appliances divisions.
Such a measure will reduce the total size of the company workforce to 66,000 employees by the end of the current business year.
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