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Hitachi Beats First-Quarter Profit Estimates, Raises First-Half Forecast
Hitachi Ltd., Japan’s No. 3 company by sales, had a third straight quarter of profit as economic growth in China and the U.S. and fueled demand for products including auto parts and hydraulic excavators.
Net income at the Tokyo-based maker of nuclear power plants, construction machinery, factory equipment and home appliances was 86.1 billion yen ($996 million) in the three months ended June 30, compared with an 82.7 billion yen loss a year earlier, the company said today in a statement. That’s almost four times the 23 billion yen profit average of three analyst estimates compiled by Bloomberg.
Hitachi, which hasn’t made an annual profit since the year to March 2006, is benefiting from a reorganization last year that made five subsidiaries fully owned and scaled back money-losing television and semiconductor operations. All 10 of the company’s divisions were profitable, including the social infrastructure and IT units, where sales declined.
“They’ve toned down the loss-making businesses,” said David Rubenstein, a Tokyo-base analyst at MF Global Ltd. “These are positive, small steps for them.”
Hitachi fell 2 percent to close at 352 yen on the Tokyo Stock Exchange before the announcement. Shares of the company have gained 24 percent this year, outperforming the benchmark Nikkei 225 Stock Average which declined 9.6 percent.
Auto, Electronic Capex
Higher capital spending by electronics manufacturers and chipmakers contributed to a 23 percent increase in sales at the electronics devices division, Hitachi said. Revenue at the automotive systems division rose 38 percent, while sales at the materials division climbed 26 percent.
First-quarter operating profit was 88.5 billion yen, compared with a loss of 50.6 billion yen a year earlier, the company said. Sales rose 14 percent to 2.15 trillion yen, led by a 41 percent increase in revenue from Asia.
“Sales of elevators and construction equipment in Asia, especially China, were solid,” executive vice president Takashi Miyoshi told reporters today in Tokyo. “Electronic components beat our target.”
The company raised its forecast for first-half net income by 82 percent to 100 billion yen, while leaving its estimate for the 12 months ending March 2011 unchanged.
“Europe’s debt crisis is a concern and government stimulus packages around the world are phasing out,” Miyoshi said. “It’s unclear whether conditions are going to continue to improve.”
To contact the reporters on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net; Mikako Nakajima in Tokyo at mikako@bloomberg.net
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