Japan electronics firms’ profit seen patchy

By Isabel Reynolds

TOKYO (BestGrowthStock) – Japan’s electronics firms are expected to show a patchy recovery for July-September from last year’s weak results but even strong performers will likely leave their full-year forecasts unchanged as concerns mount over the strong yen and disappointing demand for TVs.

A scorching summer boosted sales of air conditioners and the Japanese government’s “eco-point” subsidy system helped domestic demand for energy efficient household appliances, but the outlook for the second half of the year to next March is murky.

“Some of the positive factors are temporary and overall I think a lot of companies will leave their full-year forecasts unchanged because of exchange rates,” said analyst Takao Hattori of research firm T.I.W.

The dollar fell to a 15-year low against the yen on Monday, approaching a postwar record low of 79.75 yen set in 1995, leaving many Japanese exporters’ dollar assumptions, at around 90 yen, out of kilter with reality.

Electronics conglomerate Toshiba Corp has said it is preparing for a yen rise to 70 to the dollar while a Japanese media report said Toyota Motor would cut its assumed dollar rate to 80 yen.

Electronics-to-entertainment giant Sony Corp is expected to climb back into the black with a 32.9 billion yen profit for the quarter, analysts estimate, compared with a loss of about the same size a year ago.

Despite the setback of the rising yen, solid demand for Sony’s cameras, camcorders and games has been backed up by continued cost-cutting, analysts say.

Shares in the company have risen more than 15 percent since the end of the last quarter on June 30, compared with a 0.1 percent fall in the Nikkei average over the same period.

TV DEMAND MURKY

Sony, which competes with global market leader Samsung Electronics and LG Electronics in televisions, will likely rein in losses in its TV business by restructuring, including selling off factories.

That restructuring helped the company to surprise markets with a 67 billion yen overall profit last quarter, when analysts had expected a loss. Sony also raised its annual profit forecast to 180 billion yen for the year.

“Their plan for TV sales was pretty aggressive, so they may not meet it in terms of unit sales,” said Hattori of T.I.W., referring to Sony’s target of 25 million sets for the year.

“But the effects of restructuring may kick in,” he added. “I think that will probably offer more support than expected in the second quarter and going forward.”

He nevertheless expected Sony to make a loss in TVs over the full year to next March, with recent comments from manufacturers pointing to falling prices and weaker-than-expected demand for televisions in the United States.

“Our view on the U.S. market is getting gloomier by the day,” said DisplaySearch television market analyst Torii Hisakazu.

That trend may deliver a particularly heavy blow to panel maker Sharp, which will likely suffer from a cut in production of liquid-crystal display (LCD) panels this year and is expected to see a 32 percent fall in second-quarter operating profit.

Rival panel-maker LG Display of South Korea last week reported its lowest profit in six quarters, as LCD panel prices tumbled.

Among other tech-sector leaders, games giant Nintendo is expected to report profits down by more than a third after it was forced last month to cut its own sales and profit forecasts for the year to next March, blaming the strong yen and a lack of compelling software.

Canon Inc, which kicks off the tech sector’s earnings season on Wednesday, is expected to show a nearly 50 percent jump in operating profit year-on-year to 89.5 billion yen, on healthy camera sales and cost-cutting.

Panasonic Corp is seen doubling profits to 97.6 billion yen on the previous quarter, with sales of air conditioners and other household goods booming, and its outlook is considered relatively rosy after sharpening its focus on environmental technology.

(Additional reporting by Reiji Murai; Editing by Edmund Klamann)

Japan electronics firms’ profit seen patchy