Toshiba Forecasts Higher Profit on Chip, Power Equipment

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The company logo is displayed high on the external wall of an elevator test center at Toshiba Corp.'s Fuchu factory in Tokyo. Close

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Photographer: Robert Gilhooly/Bloomberg

The company logo is displayed high on the external wall of an elevator test center at Toshiba Corp.'s Fuchu factory in Tokyo.

Toshiba Corp. (6502), the Japanese maker of flash-memory chips, elevators and steam turbines, forecast a 29 percent gain in full-year profit on higher demand for semiconductors and power equipment.

Net income may be 100 billion yen ($1 billion) for the year ending March 31, compared with 77.5 billion yen a year earlier, the Tokyo-based company said in a statement today. Sales may rise 5.2 percent to 6.1 trillion yen, the company said

Toshiba, the world’s second-biggest maker of flash memory, is focusing on its chip and energy operations while trying to rebuild its home-appliances business. Hisao Tanaka, who will succeed Norio Sasaki as president in June, plans to speed up overseas expansion to benefit from faster economic growth than in its home country where the population is shrinking.

Operating profit, or sales minus the cost of goods sold and selling, general and administrative expenses, may rise 34 percent to 260 billion yen this fiscal year, Toshiba said.

Toshiba lost 5 percent to 512 yen in Tokyo trading before the earnings release. It has risen 52 percent this year, compared with a 37 percent gain in the benchmark Nikkei 225 Stock Average.

Net income in the three months ended March 31 fell 62 percent to 23 billion yen, Toshiba said. Sales rose to 1.7 trillion yen.

Television Losses

Toshiba’s television unit lost about 50 billion yen in the past financial year as the business was hurt by a weaker yen, Corporate Executive Vice President Makoto Kubo told reporters today.

The company is targeting a profit in the business in the September quarter and may raise prices for television and personal computers in Japan because of a weaker yen, he said.

Operating profit at Toshiba’s social infrastructure business, its biggest unit by sales, fell 24 percent to 71.2 billion yen in the three-month period. The division makes thermal and hydropower systems, elevators and medical devices. It gained from demand for gas-fired power stations following the 2011 Fukushima nuclear accident.

Toshiba was selected to supply Tokyo Electric Power Co. with so-called smart meter systems that allow users to access data on their power use. Toshiba will be a prime contractor and system integrator of the communication system which Tokyo Electric plans to install in as many as 27 million households in the next 10 years.

Memory Chips

Toshiba’s electronics devices unit, which makes flash memory for Apple Inc. products, had an operating profit of 35.7 billion yen last quarter.

The price of 32-gigabit NAND flash memory surged 41 percent to $4.04 in the three months ended March 31, according to TrendForce Corp.’s DRAMeXchange, Asia’s biggest spot market for the chips. The price began rising after Toshiba, the biggest supplier after Samsung Electronics Co., cut production in July.

Toshiba is buying the chip-production assets of Bridgelux Inc., a producer of energy-sipping light-emitting diodes. The deal expands a licensing and manufacturing partnership the companies signed last year, Toshiba and Bridgelux said last month.

The company is in talks to sell as much as 36 percent of its Westinghouse Electric atomic-power business after being forced to increase its stake in the unit to 87 percent. Toshiba was compelled to buy 20 percent of Westinghouse in January after Shaw Group Inc. used an option to sell its stake. Separately, Toshiba is in talks with General Electric Co. (GE) to set up a venture to develop and sell thermal-power systems.

To contact the reporter on this story: Naoko Fujimura in Tokyo at nfujimura@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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