Struggling appliance maker Sanyo Electric Co. said Friday it expects to post a net loss of 50 billion yen for the 2006 business year instead of a 20 billion yen profit, and it will cut 2,200 more jobs by the end of March.
The company said it will cut 1,500 local workers and 700 overseas to reduce its annual payroll by 17 billion yen in the 2007 business year, which begins April 1.
Sanyo has already slashed 14,000 jobs worldwide as part of a restructuring plan under new management.
The firm said it will spend 40 billion yen for restructuring costs, including 21 billion yen on the planned job cuts.
It attributed the poor performance mainly to falling sales of cell phones and digital cameras — the main pillars of its turnaround plan — as competitors continued to engage in price-cutting wars.
Given the harsh business environment, Sanyo officials said they expected the company to continue struggling for the rest of the year.
Sanyo acknowledged it was unable to keep up with the fast-changing cell phone and digital camera businesses.
For the first half, the firm logged a net loss of 3.6 billion yen, compared with a loss of 142.5 billion yen the previous year.
Sanyo posted a 15.8 billion yen operating profit in the April-September period compared with an operating loss of 28.4 billion yen a year earlier, while sales dropped 7.1 percent year on year to 1.09 trillion yen.
Last November, Sanyo mapped out a midterm business plan to turn itself around under new management headed by Chairman and Chief Executive Officer Tomoyo Nonaka and President Toshimasa Iue.
“We will definitely make a full recovery in the next fiscal year. We have to review the cost structure of our core businesses: cell phones and digital cameras,” Iue told a news conference in Tokyo.
Iue denied media reports that the firm is considering selling its cell phone unit to accelerate restructuring efforts.
In May, Sanyo reported a record consolidated net loss of 205.6 billion yen for fiscal 2005, compared with a net loss of 171.54 billion yen the previous year due to falling sales and losses incurred from restructuring.
In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.