| | Fuji Photo to raise film prices on silver spike
Wed May 17, 2006 5:56 AM ET
TOKYO, May 17 (Reuters) - Japan's Fuji Photo Film Co (4901.T: Quote, Profile, Research) said on Wednesday it would look to raise prices of camera film and other photosensitive material products due to the soaring cost of silver and crude oil, marking its first across-the-board price hike in over 25 years.
Fuji Photo, the world's second-largest maker of photographic film after U.S.-based Eastman Kodak (EK.N: Quote, Profile, Research), said it was considering raising prices for a range of consumer and professional film by 3 to 20 percent worldwide from June.
The move comes on the heels of an announcement by Kodak last month that it would lift its prices by 3 to 17 percent from May 1. Kodak also cited the sky-high price of silver, a key raw material used to produce photo film.
Silver <XAG=> topped $15 an ounce earlier this month for the first time since January 1981 as funds and speculators actively bought the metal. Silver was currently trading at about $13.90.
It would be the first time in over a quarter of a century that Fuji Photo lifted prices across its film product line. The last time was 1980 when the billionaire Hunt Brothers of Texas sent silver to around $50 with an attempt to corner the market.
Fuji Photo has also been hurt by the soaring oil price because it uses plastics in many of its products including the cases that hold the film and in disposable cameras. The price of plastic is heavily influenced by the oil price.
"We may have taken steps to cut costs, but the sharp rise in raw materials prices has far exceeded our efforts," said a Fuji Photo spokesman.
Fuji Photo and Kodak will soon be the only two major producers of photographic film left as rival Konica Minolta Holdings Inc. (4902.T: Quote, Profile, Research) made the decision earlier this year to pull out of the market due to slumping demand.
The departure of Konica Minolta is expected to benefit Kodak and Fuji Photo by easing supply. But the market is far from promising -- it is shrinking at about 20 percent each year due to the popularity of digital cameras, which don't use film.
Konica Minolta estimates its share of the global film market at just under 20 percent. Fuji Photo sees its share at 35 percent, while Kodak, which has been downsizing its film operations, is thought to control about 45 percent.
Fuji Photo's operating profit tumbled 57 percent to 70.44 billion yen ($643.8 million) in the past business year ended March 31, weighed down by costs to restructure its photo film division and hefty raw materials costs.
Shares of Fuji Photo closed on Tuesday 0.26 percent lower at 3,770 yen, underperforming the Tokyo stock market's chemicals index (.ICHEM.T: Quote, Profile, Research), which rose 0.67 percent. -- additional reporting by Miho Yoshikawa and Chikafumi Hodo
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