Aug. 24 (Bloomberg) -- Mori Seiki Co., the world’s fourth- largest machinery tool maker, may break even next fiscal year as manufacturers including hybrid-car makers start spending again, said President Masahiko Mori.

To meet the target, the company will need to boost its sales forecast by 50 percent to 120 billion yen ($1.3 billion) for the year starting April 2010, Mori said in an interview. The Nagoya, Japan-based company, whose customers include Toyota Motor Corp.,Rolls Royce Group Plc and General Electric Co., forecasts an operating loss of 20 billion yen this fiscal year.

Mori Seiki’s lathes and machining centers will also benefit from demand for trains and wind power plants, Mori said. Global manufacturers are resuming investment in factories and equipment as economies recover from the worst recession since World War II.

“Plans to spend on electric and hybrid cars, and fuel- efficient diesel turbo motors have started,” Mori said Aug. 21 in Tokyo. He forecasts a 20 percent gain in total orders next fiscal year, he said, without giving specific numbers.

Mori’s break-even target compares with an average forecast for a 5.6 billion yen operating loss, based on the estimates of 10 analysts surveyed by Bloomberg.

Panasonic EV Energy Co., Toyota’s hybrid-car battery venture with Panasonic Corp., will open a third factory in Miyagi prefecture next year that will raise production by at least 100,000 units to about 1 million units. Mori Seiki also supplies tools to Honda Motor Co. and Mitsubishi Motors Corp., the maker of the i-MiEV electric car.

Mori Seiki shares have risen 53 percent this year on the Osaka Stock Exchange, compared with a 13 percent gain in the Topix index. The stock advanced 3 percent to 1,054 yen today.

Vehicle Orders

Orders related to cars and motorbikes accounted for 20 percent of Mori Seiki’s total in terms of volume, and oil and energy-related contracts made up 7 percent, according to a July 27 company presentation. Orders for machines to build industrial equipment accounted for 13 percent.

Even so, Mori expects a decline in total orders from carmakers, apart from demand for hybrid vehicles, he said. Japan’s domestic car sales dropped 4.2 percent last month amid rising unemployment, according to an Aug. 3 announcement by the Japan Automobile Dealers Association.

“It will take more time before overall demand for cars recovers,” Mori said, without elaborating.

Japanese machinery tool orders, an indicator of corporate capital spending, plummeted 72 percent to 34.3 billion yen in July, the Japan Machine Tool Builders’ Association said Aug. 19.

Mori Seiki may also consider merging operations with Gildemeister AG, a German machine-tool maker, after they bought stakes in each other this year, the president said, confirming a April 6 report in the Nikkei Business Daily. The merged company will become the world’s top machine-tool producer, Mori said.

The two companies swapped 5 percent stakes in March as part of an agreement to lower costs for development, raw materials, marketing and servicing their products.

To contact the reporters on this story: Masumi Suga in Tokyo at msuga@bloomberg.net; Shunichi Ozasa in Tokyo at sozasa@bloomberg.net.

Last Updated: August 24, 2009 03:01 EDT