Hitachi Ltd., Japan’s second-largest manufacturer, posted a 52 percent drop in quarterly profit because of slower demand for construction equipment in China and the sale of a hard-disk drive unit.
Net income fell to 23.1 billion yen ($291 million) in the three months ended September from 48 billion yen a year earlier, the Tokyo-based company said in a statement today. The average of three analysts’ estimates compiled by Bloomberg was for a profit of 37.1 billion yen. Sales declined 8 percent to 2.2 trillion yen.
Hitachi also announced the acquisition of a U.K. nuclear-power company as it shifts 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, which also makes nuclear reactors, auto parts and air-conditioners, 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.
Operating income at Hitachi’s construction-equipment unit, Japan’s second-biggest, fell 42 percent to 8.6 billion yen, weighed down by slower excavator sales in China and India. Rival Komatsu Ltd. also today posted a 13 percent decline in profit for the period.
“The outlook for our excavators in China is worsening,” Executive Vice President Toyoaki Nakamura told reporters in Tokyo today.
Hitachi lowered its sales forecast to 9 trillion yen from an earlier prediction of 9.1 trillion yen. The company left its forecast for annual net income at 200 billion yen.
Hitachi’s digital media unit lost 2.4 billion yen in the quarter, the only division not to make a profit, as it restructures the flat-panel TV business and sells fewer optical disk-drive related products.
The company stepped up its cost-cutting program, slashing 80 billion yen in expenses in the first half. Hitachi also raised its full-year cost reduction target to 170 billion yen from 150 billion yen, Nakamura said.