WRAPUP 1-Toshiba ramps up capex, Hitachi sees strong growth
Tue May 11, 2010
reuters.com
* Toshiba plans $14 bln capital spending over 3 years
* Focus on chips, nuclear power plants, smart grids
* Toshiba may need equity offering to fund plans - investor
* Hitachi sees 2010/11 op profit up 68 pct at Y340 bln
* Hitachi shares fall 3.3 pct ahead of results in weak
sector
(Adds Toshiba executive, fund manager comment)
By Sachi Izumi
TOKYO, May 11 (Reuters) - Toshiba Corp (6502.T) plans to
boost capital spending, mainly in its chip and infrastructure
businesses, while rival Hitachi (6501.T) joined other Japanese
electronics makers with an upbeat growth forecast.
Japan's electronics conglomerates expect strong growth this
financial year and are ramping up capital spending as they take
advantage of a global economy on the mend and aim to accelerate
a push outside the mature Japanese market.
The companies are also zeroing in to build scale in a
smaller number of products to better compete with South Korea's
Samsung Electronics (005930.KS) and other deep-pocketed global
rivals.
"Samsung is a tough competitor and also a great partner. We
will watch their moves, but at the same time we just have to
improve our competitiveness," Toshiba Chief Executive Officer
Norio Sasaki told a news conference.
"The size of the investment is not everything. The
important thing is what to choose and what to focus on."
Toshiba, the world's No. 2 maker of NAND-type flash memory
chips after Samsung, said it will allocate 1.3 trillion yen
($14 billion) for capital spending, acquisitions and other
investments and loans over the three years to March 2013.
The bulk of that investment, the annual average of which
would mark a 74 percent rise in spending over the past business
year, will go to the division handling semiconductors and its
social infrastructure operations, which covers nuclear power.
Toshiba aims to lift operating profit to 450 billion yen in
the year to March 2013, from 117 billion yen in the year just
ended. It plans to boost sales by 25 percent to 8 trillion yen
in three years, driven by overseas growth.
Tomomi Yamashita, a senior fund manager at Shinkin Asset
Management, said it was possible Toshiba would have to issue
new shares to fund its investment plans, which could be a
negative for the share price.
"This is almost the same amount as Toshiba's debt. If
Toshiba needs more money to make investments, that means it
will have to raise money through an equity offering," Yamashita
said.
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Table on valuations vs rivals: r.reuters.com/pen53k
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HITACHI SEES GROWTH
Toshiba plans to spend 1.07 trillion yen on research and
development, about a third of which will go to the social
infrastructure business, which includes nuclear power,
industrial motors and electrical equipment for high-speed
trains.
Toshiba has said it will resume plans to build a new
factory for NAND flash memory chips, which are used in consumer
products such as Apple Inc's (AAPL.O) iPhone and iPad, while
also spending to advance production to narrower circuitry to
cut costs.
Hitachi said on Tuesday it had earmarked 630 billion yen
for capital spending in the year to March 2011, up 15 percent,
while forecasting a 68 percent jump in operating profit to 340
billion yen on sales of 9.2 trillion yen, up 2.6 percent.
The profit forecast is above the market consensus of 302
billion yen from 18 analysts polled by Thomson Reuters I/B/E/S.
Hitachi, which competes with Seagate Technology (STX.O) in
hard drives and Germany's Siemens (SIEGn.DE) in railway
systems, reported an operating profit of 160.6 billion yen for
January-March against a loss of 55.4 billion yen a year
earlier.
The result was in line with the company's own forecast for
a 158.4 billion yen profit, which it had revised up late last
month, citing deeper cost cuts and brisk demand for power
generation systems and electronic devices.
The sprawling conglomerate, which makes everything from
nuclear power plants to rice cookers, has also been reaping the
benefits of cost cuts implemented after its roughly $8 billion
net loss in the business year ended March 2009.
Ahead of the results, Hitachi shares closed down 3.3
percent while the Tokyo's electrical machinery index .IELEC.T
lost 1.7 percent. Hitachi's stock is up a third so far this
year, against a 7 percent rise in the subindex.
Toshiba's announcement came during market hours. Toshiba's
stock closed down 4.4 percent. |
