Japan’s Toshiba gets ready for 70 yen/dollar

TOKYO, Oct 25 (BestGrowthStock) – Japanese electronics conglomerate
Toshiba Corp (6502.T: ) is stepping up its expansion of overseas
production and procurement to withstand a further rise in the yen
as far as 70 to the dollar, its chief executive said on Monday.

Toshiba conducted a stress test last October, dubbed “Project
70”, that assumed an exchange rate of 70 yen to the dollar and
became the basis for expanded efforts to counter the effects of
the rising yen.

“People said the yen would never go to that level when we
came up with this plan last October, but looking at the weakness
of the dollar and the strength of the yen now, that may not be
too far from reality,” Toshiba CEO Norio Sasaki said at the
Nikkei Global Management Forum in Tokyo.

The dollar fell to a 15-year low against the yen (JPY=: ) on
Monday, drawing closer to its postwar record low of 79.75 yen set
in 1995 as traders took a weekend G20 statement as a green light
for continued dollar weakness. [FRX/]

Yen strength has taken its toll on Japan’s export-fuelled
economy, with data on Monday showing export growth slowed for a
seventh consecutive month while policymakers struggle to keep the
fragile economic recovery intact. [ID:nTOE69O008]

Sasaki said Toshiba’s measures, which also include expanding
strong businesses and shrinking money-losing operations, have
been paying off and now the company’s operating profit actually
rises by 700 million yen ($8.6 million) for each 1 yen gain in
the Japanese currency’s value against the dollar.

Yen strength against the dollar used to cut into Toshiba’s
profit.

He added, however, that the euro was a “different story”.

Strength in the yen generally hurts the competitiveness of
Toshiba, the world’s No. 2 maker of NAND-type memory chips used
widely in cellphones and consumer electronics, as its rival
Samsung Electronics Co (005930.KS: ) enjoys the benefits of a
relatively weak won.

“We have the currency issues and other disadvantages
including a high corporate tax,” Sasaki said.

“What we can try to do is to stay ahead with advanced
technology while lessening the impacts (of these disadvantages).”

The dollar has fallen steadily across the board, including
against the yen where the threat of intervention by Japanese
authorities has slowed but not halted the slide, as the market
anticipates a second round of quantitative easing from the
Federal Reserve.
($1=81.35 Yen)
(Reporting by Sachi Izumi; Editing by Edmund Klamann)

Japan’s Toshiba gets ready for 70 yen/dollar