July 27 (Bloomberg) -- Sanyo Electric Co., which posted a record loss last year, said its first-quarter net loss narrowed on stronger orders for rechargeable batteries from the mobile- phone industry and higher sales of solar panels.

The loss at the world's biggest maker of rechargeable batteries shrank to 9.67 billion yen ($83 million) in the three months ended June 30 from 26.2 billion yen a year earlier. Sales fell 11 percent to 504.1 billion yen, Sanyo said today.

President Toshimasa Iue aims to revive earnings by focusing on the rechargeable-battery and solar-panel operations, after losing ground in consumer electronics to Matsushita Electric Industrial Co. and low-priced Asian manufacturers. The Osaka- based company, which posted a record net loss last fiscal year, received a 300 billion yen bailout from banks including Goldman Sachs Group Inc. to pay for job cuts and close factories.

``I will be monitoring the mobile-phone business, audio-and- visual equipment, and the outlook of its chip business to see whether the company is able to meet the full-year profit goal,'' said Masahiko Ishino, an analyst with Mitsubishi UFJ Securities Co. in Tokyo. ``A loss is still a loss,'' said Ishino, who has an ``underperform'' rating on Sanyo.

Shares of Sanyo were unchanged at 219 yen at the 3 p.m. close in Tokyo. The stock fell 23 percent in the past 12 months, the fifth-worst performer on the Nikkei 225 Stock Average.

Rechargeable Batteries

``We managed to narrow the loss as we had good results in the rechargeable battery business, and the solar business was good, particularly in Europe,'' Vice President Koichi Maeda said at a briefing.

Operating profit for the components division, which includes the rechargeable and solar batteries, improved to a 12.6 billion yen profit from a loss of 2.7 billion yen a year earlier.

Sanyo eliminated 14,000 jobs, or 15 percent of its workforce, and sold real estate and assets worth 129 billion yen in the past year as part of a plan to revive profit. Sanyo also spun off its unprofitable semiconductor unit into a separate company this month to give it more flexibility in raising cash.

The cuts increased operating profit by 10 billion yen in the quarter, Maeda said. Sanyo expects the cuts to raise operating profit by as much as 30 billion yen for the full year, he said.

Sanyo in May projected a net income of 20 billion yen, sales of 2.4 trillion yen, and operating profit, or sales minus the cost of goods sold and administrative expenses, of 65 billion yen in the year ending March 31, 2007..

The company is keeping its full-year forecasts because the ``decisive quarter'' is in the three months ending Dec. 31, when customers make purchases for the year-end holiday, Maeda said.

The first-quarter operating profit was 2.57 billion yen, compared with a loss of 13 billion yen a year earlier.

Rechargeable Batteries

Demand for longer-lasting rechargeable batteries used in hybrid cars and consumer electronics such as cell phones, digital cameras and notebook computers is increasing, Sanyo said today.

Sanyo on May 29 projected sales to more than double at its power business to 1 trillion yen over four years, from about 400 billion yen in the year just ended March 31. The power unit makes rechargeable batteries, batteries used in hybrid electric cars, and car-navigation equipment.

Sanyo expects sales of solar batteries to rise to 180 billion yen in the year ending March 2011, from the 56 billion yen forecast for this year, it said on June 21. Revenue from the business almost doubled last year to 47.5 billion yen.

The company aims to increase sales of its mobile phones, particularly in the U.S., Maeda said, without providing details.

Last month, Sanyo and Nokia Oyj, the world's biggest cell- phone maker, scrapped plans to jointly develop handsets for code division multiple access networks used in North America, Korea and Japan.

To contact the reporter on this story: Hiroshi Suzuki in Tokyo at hsuzuki5@bloomberg.net.

Last Updated: July 27, 2006 08:45 EDT