Hitachi Reports Record Loss with Glum Outlook for 2009
By wchung | 12 May, 2009

Electronics maker Hitachi Ltd. posted the biggest ever annual loss for a Japanese manufacturer and warning of more red ink, said it doesn’t expect the global economy to recover until next year at the earliest.

Hitachi, which produces everything from home appliances to medical equipment to nuclear power systems, said Tuesday it lost 787.3 billion yen ($8.1 billion) for the fiscal year through March. That was far worse than last year’s 58.1 billion yen loss and marks the company’s third straight year in the red.

Annual revenue tumbled 11 percent to 10 trillion yen, and operating profit — which reflects its core business — plunged 63 percent to 127.1 billion yen.

Hitachi’s result is the worst annual net loss for a Japanese manufacturer, according to Shinko Research Institute Co. It is the second-largest in Japanese corporate history after an 834.6 billion yen loss reported by telecommunications giant Nippon Telegraph and Telephone Corp. for the fiscal year ending March 2002.

The Tokyo-based company said virtually every area of its sprawling business was battered by the sharp global downturn. An appreciating yen, which erodes the value of overseas earnings, also hurt the bottom line.

Demand withered throughout the company’s diverse operations, particularly in its digital media and consumer product segment as well as its power and industrial systems business, according to Hitachi. Economic distress has squelched demand not only in industrialized nations but also in China and other developing markets.

Hitachi said the record loss stemmed from a combination of lower operating income, a 390 billion yen write-down of deferred tax assets, restructuring costs and steep equity losses.

The company expects the pain to continue this year, though it forecast a narrower net loss of 270 billion yen.

“The global economy … is not expected to see a full-fledged recovery until 2010 at the earliest,” Hitachi said in a statement. “The global economic outlook is being shaped by concerns about the U.S. and other industrialized nations slipping into negative economic growth, and about slowing economic growth in emerging economies and the yen’s appreciation.”

As part of its turnaround efforts, Hitachi has already announced it will slash 7,000 jobs, or nearly 2 percent of its global work force.

It has also named Takashi Kawamura, 69, who heads two of its subsidiaries — Hitachi Plant Technologies Ltd. and Hitachi Maxwell Ltd. — as its incoming president, chief executive and chairman, a move that will become official late June.

At a press conference in April, Kawamura outlined his plans for the company, which included a greater focus on its “social innovation business.” He said he seeks to fuse Hitachi’s know-how in information and power systems, boost the company’s global presence and expand environment-related businesses.

In trading Tuesday, Hitachi shares sank 5.2 percent to 381 yen on the Tokyo Stock Exchange. The company reported earnings after markets closed.

Hitachi reports earnings based on U.S. accounting standards.

5/12/2009 4:54 AM TOMOKO A. HOSAKA Associated Press Writer TOKYO