19. Hitachi Raises Flat-panel tv Profile

Hitachi is going on the offensive in the flat-panel TV market by increas­ing worldwide production capacity fivefold in the next two years and tripling its advertising budget.

Hitachi, which is Japan's second largest plasma-display-panel (PDP) TV maker after Matsushita, said yesterday it would expand its PDP opera­tions to make up for a drop in mar­ket share and turn the division profitable by the second half of next year.

The group's renewed commitment to its PDP business comes just a week after it announced that Etsuhiko Shoyama, Hitachi's president, would resign to make way for a younger successor. Mr Shoyama's decision to step down earlier than expected spurred speculation that he was taking responsibility for the group's poor performance.

However, the vice-president and head of the platform group, said yesterday that the PDP business was on track to turn profit­able next year and that Hitachi aimed to make a 5 per cent operat­ing profit margin.

"We believe we will not lose to anyone, in terms of costs, because of our technology and development capability," he said.

Under the new plan, Hitachi will focus its investment on high definition PDP TVs, which it expects to be the main growth sector. Production capacity of the panels at its manu­facturing facility will increase three­fold to 300,000 panels a month, with the start of a third line.

Hitachi hopes to reduce the number of parts it uses in PDP TVs by 30 per cent, and materials costs by 50 per cent, next year.

The aim is to generate revenues of Y1,500bn ($12.8bn) from digital prod­ucts, of which PDP TVs would com­prise just under half.

The vice-president dismissed suggestions that the group might spur further consolidation in a sector where sharp price falls have made it difficult to generate profits. "We have no plans (to further consoli­date) but from now on we will reap the fruits of what we have invested (in PDP) so far," he said.

However, he declined to set any specific profit targets in the near term and failed to dispel concerns as to whether the group could really turn the business profitable.

One analyst said it was "totally unclear how they are going to make profits".

"Fujitsu Hitachi PDP [its manufac­turing plant] will lose Y41bn this year. Their plan to turn the TV busi­ness profitable is not achievable if they include FHP," he said.

Vocabulary:

plasma-display-panel (PDP) – плазменная панель

generate profit – получать прибыль

20. Honda's 2nd Quarter Net Fell 8.5%

Japanese Car Maker Felt Pinch in U.S., Europe as Currency Fluctuated

TOKYO - Honda Motor Co.'s profit fell 8.5% in the second quarter, hit by curren­cy fluctuations and tumbling sales in Eu­rope and the U.S., but it raised its profit forecast for the year.

The Japanese auto maker's group net in­come for the three months ended September 30 fell to 58.1 billion yen (630.2 million euro), or 59.63 yen a share, from 63.52 billion yen, or 65.19 yen a share, in the same period in the previous year.

Honda's world-wide revenue fell 0.9% to 1.5 trillion yen, as weakness in the dollar and euro eroded the value of Honda's over­seas sales in terms of its home currency. Honda's revenue for the quarter would have increased 4.3% if exchange rates had remained unchanged from last year.

"The decrease in revenues was primar­ily due to currency effects," said Honda Executive Vice President Koichi Amemiya.

Honda, maker of the popular Accord sedan, Odyssey minivan and Civic, is par­ticularly vulnerable to declines in the dol­lar against the yen because it earns more than half its operating income in North America. The dollar fell to an average of about 108 yen for the quarter just ended from about 113 yen a year earlier.

But Honda still expects a solid perfor­mance for the full year. It raised its forecast for group net profit for the year end­ing March to 220 billion yen from an earlier estimate of 190 billion yen, citing a strong showing in the April-to-June period and a stable outlook for the coming six months. The auto maker also raised its group operating profit forecast for the en­tire year to 375 billion yen, from its earlier projection of 310 billion yen.

Honda, the first of Japan's major car makers to report earnings this season, of­fers a look at both the pressures and op­portunities facing the rest of the industry. Toyota Motor Corp. is also expected to re­port that the rising yen hurt profit, though Japan's largest auto maker has also bene­fited from strong sales growth in Japan and the U.S. Nissan Motor Co., meanwhile, is forecasting greatly improved earnings, largely because of an intense cost-cutting campaign. The company, which is 37%, owned by French car maker Renault SA, last week said it sees a profit of 170 billion yen for the half-year and 250 billion yen for the full year, more than four times its pre­vious projection.

Smaller Japanese auto makers are strug­gling. Mitsubishi Motors Co. and Mazda Motor Co. are expected to post billions of yen in losses, mostly from charges taken to deal with underfunded pension plans.

Honda's world-wide automobile sales fell 1.9% in the second quarter, largely be­cause of a 43% decline in sales of automobiles in Europe. Car sales in Japan rose 2.8% but Honda sold 1.6% fewer automobiles in North America.