Japan’s major electronics makers have reported sharply improved earnings, although some continue to lag behind others. The turnaround for the firms, many of which suffered huge losses and were forced to introduce massive cuts to their workforce in recent years, may partly be aided by the steep fall in the value of the yen against the dollar since 2012.
But the turnaround also is attributed to the outcome of their efforts to pull out from loss-making businesses to concentrate on growth segments. Many of these companies are moving to cut back on their consumer product lines as they shift operations toward the demands of corporate customers.
According to a tally by Nomura Research Institute, six major electronics makers — Hitachi, Toshiba, Mitsubishi Electric, Panasonic, Sony and Sharp — reported a 54.3 percent rise in combined operating profits on a 3.4 percent increase in sales for the April-June period over a year ago. They also expect increased sales and profits through the business year 2015. Hitachi and Mitsubishi Electric have revised upward their profit forecasts for the April-September period.
While making headway in their pursuit of more corporate sales, especially in the area of infrastructure business in overseas markets, these companies are also pouring more resources into such areas as housing, automobiles, renewable energy and health care.
Toshiba, which reported a 3 percent rise in sales and a 57 percent increase in operating profit for the last quarter, reduced the losses in its consumer business segment to ¥3.3 billion from ¥24.9 billion a year ago. It has consolidated its production of TV sets to Indonesia to cut costs. Through their efforts to reduce the manufacturing costs of products like TVs and refrigerators, Toshiba aims to make its consumer business profitable in the full year to March 2015.
Panasonic, which achieved a turnaround in the year ended March after reporting massive losses for the two previous years due to poor TV sales and other problems, has radically shifted its manpower allocations to focus on corporate business. It has terminated its plasma display TV business.
With consumer products accounting for only ¥1.8 trillion of its ¥7.7 trillion in sales for the year ended March, Panasonic no longer appears as the consumer electronics giant it used to be. Housing and automobile-related products, including solar panels and lithium-ion batteries for electric vehicles, do sell briskly, but they have yet to grow into mainstay business lines.
In contrast to Panasonic’s turnaround, Sony and Sharp appear only halfway through their efforts to restructure their businesses. Sony announced on Sept. 17 that it expects to report a ¥230 billion consolidated net loss for the year to March 2015, up sharply from the ¥50 billion loss it forecast earlier — due to weak sales of smartphones amid tough competition from cheaper products from China in emerging economies.
Sony President Kazuo Hirai said the firm will trim 1,000 workers from its smartphone business line — which it had counted on as a new growth segment to replace the television and personal computer business lines.
Sharp’s April-June results gave a mixed picture. While sales grew 1.9 percent and operating profit surged 55 percent from a year ago on the strength of LCD panels supplied to smartphone makers in China, and on robust sales of multifunction printers in overseas markets, the company reported a net consolidated loss of ¥1.7 billion as a result of ¥14.3 billion in special losses incurred in withdrawing from an Italian solar panel venture. Sharp President Kozo Takahashi says the company has yet to complete its efforts to restructure its business in Europe, where it also plans to withdraw from the LCD-TV and household appliance businesses.
For the electronics firms to stabilize their earnings structure, they need to further identify where future demand lies, and make aggressive investments in the sectors where they see growth. A comeback of the once-powerful Japanese electronics giants does not appear to be in the offing until that takes place.
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