Acknowledging Toshiba Corp. has not met its targets in the last five years, the firm’s new president lowered profit ratio forecasts Tuesday, indicating that while it expects sales to grow, profits will likely decline — or will not grow as fast.
The electronics maker is targeting an operating income ratio — operating profit divided by sales — of “more than 4 percent” for fiscal 2007, said Atsutoshi Nishida, who became president in June.
Earlier this year, Toshiba set a goal of 4.5 percent operating income ratio for the three years through March 2007.
“These goals are the minimum for what we feel we can promise,” Nishida said in outlining what he called a more realistic growth strategy to reporters and analysts at a Tokyo hotel. “We have more ambitious numbers for inside the company.”
Tokyo-based Toshiba is among a slew of once powerful manufacturers that have been struggling in recent years due to intensifying global competition, quickening product cycles and plunging prices.
Toshiba is expecting sales of 6.6 trillion yen for fiscal 2007. It recorded 5.8 trillion yen for fiscal 2004.
The company reported a net loss and an operating loss in the April-June quarter amid declining sales of flat-screen displays and falling prices for computer chips, although it is expecting to break even for the six months to Sept. 30.
In the three years from fiscal 2005 to fiscal 2007, Toshiba will invest 1.1 trillion yen in capital expenditures, 65 percent in its core electronics device sector, which includes displays and computer chips, up from 858 billion yen over the three years that ended in March 2005, Nishida said. Toshiba will invest 1.2 trillion yen in research and development over the next three years.
Nishida, a 30-year company veteran who served as an executive at its U.S. operations in the 1990s and also built Toshiba’s PC business, acknowledged his company was battered by the burst of the dot-com bubble several years ago.
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