| | Fuji Film Q1 profit falls 50 pct, keeps outlook
Fri Jul 28, 2006 5:59 AM ET
By Nathan Layne
TOKYO, July 28 (Reuters) - Japan's Fuji Photo Film Co. <4901.T> said on Friday its quarterly profit fell 50 percent, hit by restructuring costs and high raw material prices, but it stuck to its full year forecast for a profit gain of 14 percent.
Fuji Photo plans to book about 80 billion yen ($691 million) in charges this business year to March as it scraps production capacity for photographic film and cuts thousands of related jobs, setting the stage for a possible recovery next year.
"Our restructuring has been proceeding well and we plan to completely finish it this financial year," Chief Financial Officer Toshio Takahashi told a news conference.
But its earnings have also been weighed down by soaring prices of raw materials, such as silver used to make film and aluminium used in the production of printing plates, overshadowing positive external factors like the softer yen.
Fuji Photo, the world's second-largest maker of photographic film after Eastman Kodak <EK.N>, said group operating profit came to 15.74 billion yen ($135.9 million) in the three months to June 30, down from 31.2 billion yen a year ago.
Few analysts provided quarterly forecasts, but the result was slightly below the average from three brokerages of 17.8 billion yen.
Fuji Photo's revenues rose 5.1 percent to 656.85 billion yen in the quarter, reflecting blistering demand for film used in liquid crystal displays, as well as strong sales of printing plates and a handful of acquisitions made in the past year.
For the full year to next March, Fuji Photo stuck to its forecast for an operating profit of 80 billion yen, up from 70.44 billion yen a year earlier, which is below the market consensus of 89.5 billion yen. The company is aiming for a sharp rebound in profit to 200 billion yen in the year to March 2008.
Fuji Photo and Kodak will soon be the only two major producers of photographic film left as rival Konica Minolta Holdings Inc. <4902.T> decided earlier this year to pull out of the market due to slumping demand.
Fuji Photo is a diverse manufacturer with large interests in digital cameras, copiers, printers, LCD materials, plates used for commerical printing and medical imaging equipment. Photo film accounts for less than 10 percent of its group sales.
It said that it ailing digital camera division reached a break-even level in the quarter as it shifted production to China to lower costs and focused on launching more advanced models that were not as susceptible to price declines.
Fuji Photo, the world's sixth-biggest digital camera maker, has enjoyed brisk sales in Japan of the F30, a six-megapixel compact camera that features high sensitivity technology, allowing for natural-looking pictures even in low light.
But tough competition with rivals such as Canon Inc. <7751.T>, Sony Corp. <6758.T> and Nikon Corp. <7731.T> continue to weigh on its camera margins, as does a relatively small presence in the high-end where margins tend to be fat.
"Price competition in Europe and North America is especially fierce," Fuji Photo's Takahashi said.
For a press release of the results, go to: fujifilm.com
Shares of Fuji Photo fell about 2 percent in the April-June quarter, outperforming a 7.3 percent drop in the Tokyo market's chemicals index <.ICHEM.T>.
Prior to the announcement, the shares rose 0.8 percent to close at 3,790 yen. The chemicals index added 0.96 percent. ($1=115.77 Yen)
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