Hitachi H1 profit surges 13-fold on chip demand
By Miki Shimogori
TOKYO, Oct 31 (Reuters) - Japanese electronics giant Hitachi Ltd on Tuesday posted a near 13-fold jump in consolidated net profit for the past half year, thanks to robust demand for chips used in digital cameras and mobile phones.
It said consolidated net profit for the six months through September 30 surged to 61.68 billion yen ($567.6 million) from the 4.78 billion yen earned in the first half of last year and higher than the company's revised estimate of 55 billion yen announced in mid-September.
Analysts said the stronger-than-expected earnings, reported under U.S. accounting rules, would however do little to its share price, down 30 percent since the start of this year amid worries of slowing chip demand in coming years.
Hitachi, which released its earnings after the market closed, ended Tuesday down 1.1 percent at 1,170 yen.
``It's all down to semiconductors,'' said Hitachi executive vice president Yoshiki Yagi of the profit figure.
Yagi said that sector generated operating profit of some 61 billion yen, or 37 percent of the total, although Hitachi expects a smaller 36 billion yen profit in the second half on softening semiconductor prices.
``Still, we don't see any need now to cut back our chip production levels,'' he added.
The integrated electronics company, which makes everything from washing machines to nuclear reactors, also boosted its full-year net profit forecast to 125 billion yen, or 37.45 yen per share, up from its April prediction of 80 billion yen.
That beat the 32.16 yen consensus estimate by First Call/Thomson Financial, which tracks brokerage forecasts.
CHIPS BATTERED
Hitachi is the latest of Japan's top chipmakers to announce solid first-half results.
The others -- NEC Corp , Fujitsu Ltd and Toshiba Corp -- reported a sharp rise in interim profits in the past week, and all but Fujitsu raised earnings outlooks for the full year through next March.
Hitachi, hit hard by a slump in the DRAM chip market in the late 1990s along with other leading Japanese chipmakers, has been shifting its focus toward more sophisticated high-margin products such as system LSI (large scale integration) chips.
Despite the rosy earnings, analysts agreed potential rises in those firms' share prices would be limited.
``Earnings are now doing little for share performance,'' said Shinko Securities' senior analyst Toshiya Tsuchikawa.
``What the market is seeing is their business potential in the next year. As long as worries persist about a possible slowdown in their business growth, buying will hardly emerge.''
But Tsuchikawa said the valuation of Japanese chipmakers was still higher than that of U.S. firms such as Intel Corp (NasdaqNM:INTC - news), whose price-to-earnings ratio is currently a little more than 20.
Fujitsu's ratio is now around 42, NEC's a little less than 40 and Hitachi's around 33.
``I doubt these issues will suffer another major setback from current levels,'' Tsuchikawa said, adding it would be a while before they fully recovered given uncertainty in the sector.
Fumiaki Sato, senior analyst at Deutsche Securities, has said the global chip market will face a major downturn due to oversupply and slower demand for cell phones, predicting the sector will likely not recover until at least mid-2001.
According to an industry survey, however, the global chip market could grow in value by 20.3 percent in 2001 to $250.02 billion after 39.2 percent growth this year.
The growth rate will slow to 11 percent in 2002, according to an estimate by the World Semiconductor Trade Statistics (WSTS) organisation, which represents 68 chipmakers around the world. |
