Hitachi Quarterly Profit Falls on Economy, Disk-Drive Unit Sale

Hitachi Ltd. (6501), Japan’s second-largest manufacturer, posted a 52 percent drop in quarterly profit after selling a hard-disk drive unit and suffering from weaker demand because of the global economic slowdown.

Net income fell to 23.1 billion yen ($267 million) in the three months ended September from 48 billion yen a year earlier. The average of three analysts’ estimates compiled by Bloomberg was for a profit of 37.1 billion yen.

Hitachi also announced the acquisition of a U.K. nuclear- power company as it moves its focus from electronics to infrastructure and power. The Tokyo-based company sold its hard- disk drive unit to Western Digital Corp. in March, and it has also shed a stake in Elpida Memory Inc. and a liquid-crystal display business.

“Hitachi is seeing the impact of its restructuring,” said Takeo Miyamoto, a Tokyo-based analyst at Deutsche Bank AG. “It’s no longer receiving the profits from the hard-disk drive unit. The slowdown in the economy is also having an impact.”

The company agreed to buy Horizon Nuclear Power from EON AG and RWE AG, according to a separate statement. Horizon has government backing to build plants in Wales and western England.

Hitachi dropped 0.2 percent to 410 yen on the Tokyo Stock Exchange. The announcements came after the market close. The company has risen 1.5 percent this year, compared with a 0.7 percent gain for the benchmark Topix Index.

The company left its forecast for annual net income at 200 billion yen. It expects sales of 9 trillion yen, compared with an earlier forecast of 9.1 trillion yen.

In July, Hitachi won a 4.5 billion pound ($7 billion) train order in the U.K. with partner John Laing. The company also makes nuclear reactors, auto parts and air-conditioners.

To contact the reporters on this story: Chris Cooper in Tokyo at ccooper1@bloomberg.net; Kiyotaka Matsuda in Tokyo at kmatsuda@bloomberg.net

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net

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