TOKYO (AP) – Sanyo Electric Co. sank to an annual loss because of declining sales, the strong yen and rising material costs, but it expects to muster a small profit this fiscal year.
Sanyo, which is being acquired by larger Japanese rival Panasonic Corp. (story here), said Thursday that it booked a net loss of 93.2 billion yen ($976 million) for the fiscal year through March, compared with a 28.7 billion yen profit the year before.
Restructuring costs in its semiconductor business added to the loss.
Sales fell 12.2 percent to 1.77 trillion yen ($18.5 billion), while operating profit – which reflects a company's core operations – tumbled 89 percent to 8.3 billion yen ($86.6 million).
Executive Director and President Seiichiro Sano said, "Sanyo's business really felt the effects of the global economic downturn, especially in the second half of fiscal 2008," calling the annual results "severe."
Sano said Sanyo will try to overcome the difficult business environment by focusing on "our strengths, such as the rechargeable and solar battery businesses."
The company expects to return to a slight profit of 7 billion yen ($73.3 million) for the fiscal year through March 2010, on projected sales of 1.67 trillion ($17.5 billion), down 6.2 percent from fiscal 2008.
Sanyo has said it will cut 1,200 jobs worldwide, or 5 to 10 percent of its global workforce in the semiconductor division. Sanyo employs about 99,800 people worldwide.
In December, Panasonic began a takeover of Sanyo in a deal that would make the combined entity one of the world's biggest electronics companies. The deal is currently undergoing legal clearance.
As part of its effort to focus on strong sectors, Sanyo revealed a plan to build a new factory in Kasai, in western Japan, to produce lithium ion batteries – jointly developed by Volkswagen AG – for hybrid cars, and more than double the nickel metal hydride battery output at an existing plant. Sanyo will invest 1.3 billion yen ($13.6 million) to build the new plant.
Sanyo aims to begin production at the new plant by March 2010, while its Tokushima plant will be launched later this year at an annual output capacity for 20,000 hybrids, company spokesman Ryo Hagiwara said. Further details of car battery plans will be released at a later date.
Sanyo shares closed up 0.54 percent at 187 yen on the Tokyo Stock Exchange.