- Analysts had expected an increase in the profit forecast
- Higashihara, now president, to add CEO title in mgmt reshuffle
Hitachi Ltd. slashed its full-year profit forecast, in contrast to analyst expectations, as Chinese growth slowed and oil prices plummeted.
Japan’s second-largest manufacturer by workforce predicted net income of 240 billion yen ($2 billion) for the year ending March 31, compared with a forecast of 310 billion yen in its October earnings announcement, according to a statement Wednesday in Tokyo. Analysts had expected the forecast to rise to 316 billion yen, according to the average of 19 estimates in a Bloomberg survey.
The Tokyo-based company is suffering from a slowdown in Chinese growth that has hit sales of construction machinery, as well as weak demand from oil- and gas-producing countries as crude oil prices plumb 12-year lows.
Hitachi kept its sales forecast unchanged at 9.95 trillion yen, supported by the purchase of Waupaca Foundry Holdings Inc. by the company’s Hitachi Metals Ltd. unit in 2014 and last year’s acquisition of Finmeccanica SpA’s rail business and its stake in a signals affiliate.
The company’s third-quarter results jumped, with adjusted operating income rising to a record 134.3 billion yen, boosted by the automotive-parts business and the information and telecommunications systems segment. Net income rose 68 percent from a year earlier to 75.3 billion yen, the company said, besting the average estimate of 59.3 billion yen in a survey of three analysts by Bloomberg.
Hitachi separately said Toshiaki Higashihara, currently the president and chief operating officer, will add the chief executive officer role as of April 1. Current CEO Hiroaki Nakanishi will retain his position of chairman. The move is to help improve decision-making before the company releases its next mid-term plan in May, Toyoaki Nakamura, chief financial officer at Hitachi, told reporters Wednesday in Tokyo.
“Nakanishi will still focus on Hitachi’s global operations and government relations,” Nakamura said. “We wanted to bring the roles together so there is one decision maker to make faster decisions.”
Before the earnings release, Hitachi shares fell 6.1 percent Wednesday on the Tokyo Stock Exchange to their lowest closing level since April 2013. The shares have lost 20 percent this year, compared with a 9.7 percent drop in the benchmark Nikkei 225 Stock Average.