Nikkei, Japan’s leading newspaper specialized in business and economy, reported on July 30 that announcement of financial performance of 8 major Japanese electronics for April – June 2011 (consolidated base) was complete and that there were large contrasts among them.
It is true that the Japan disaster that occurred on March 11 have negatively impacted them all attributing to shortage of components; however, it is apparent that some companies performed far better than others. This attributes to the differences in recovery and strength of business sectors. Some have started to recover and some others have been rather strong when some others have been weak.
1. How was the financial performance of the eight major Japanese electronics?
It is summarized in the chart below.
For Fiscal Year 2011, Consolidated
Company name / Sales (amount) / Sales (change from previous year) / Profit (amount) / Profit (change from previous year)
Hitachi* April-June / 2,150.6 / 0% / 2.9 / -97%
Hitachi* April-March / 9,500.0 / 2% / 200.0 / -16%
Panasonic* April-June / 1,929.5 / -11% / -30.3 /Fell to negative
Panasonic* April-March / 8,700.0 / 0% / 30.0 /-59%
Sony* April-June / 1,494.9 / -10% / -15.5 / Fell to negative
Sony* April-March / 7,200.0 / 0% / 60.0 /Returned to positive
Toshiba* April-June / 1,326.1 / -9% / 0.4 / 1%
Toshiba* April-March / 7,000.0 / 9% / 140.0 / 2%
Fujitsu April-June / 986.0 / -6% / -20.4 / Fell to negative
Fujitsu April-March / 4,600.0 / 2% / 60.0 / 9%
Mitsubishi Electric* April-June / 813.6 / 4% / 27.1 / 4%
Mitsubishi Electric* April-March / 3,790.0 / 4% / 135.0 / 8%
NEC April-June / 669.1 / 0% / -29.7 / Remained in negative
NEC April-March / 3,300.0 / 6% / 15.0 / Returned to positive
Sharp April-June / 640.3 / -14% / -49.2 / Fell to negative
Sharp April-March / 3,050.0 / 1% / 6.0 / -69%
* GAAP: Generally Accepted Accounting Principles
Source: Nikkei, translated by the author
2. Which sectors started to smoothly recover from the disaster?
It is automobile related business sectors, which have started to recover above the original outlook.
Mainly for this reason, Hitachi made upward revision in their estimation of net profit for April – September from zero to 10 billion yen. The company also revised upward of their operation income estimation from 80 billion yen to 100 billion yen and expects 76 billion yen operation income in black. The growth in their construction machinery business in Asia and other emerging countries also is the reason for their upward adjustment. As a result, although high yen is a negative factor, the company did not revise downward their estimation for the fiscal year 2011 ending March 2012.
For the very similar reason, Mitsubishi Electric made upward revision their estimation of net profit for April – September from 45 billion yen to 55 billion yen. The order they received in June for automobile related business recovered to the same level as a year ago, and their factory automation related business in Asia remains strong. As a result, the company revised upward their estimation of the net profit for the fiscal year 2011 ending March 2012 from 135 billion yen from 10 billion yen.
3. Which sector in consumer electronics was strong?
It is home appliance. This is because after the disaster the general public became extremely aware of the eco (ecology and economy, i.e. energy saving) due to nationwide electricity shortage. This led to strong revenue in many home appliance businesses of energy saving products, in particular air conditioners, resulting in stronger performance of Mitsubishi Electric, Toshiba and Hitachi compared to other 5 companies.
Home appliances, although their price is stable compared to digital AV products, have been regarded as not as strong as digital AV because replacement cycle is long. However, home appliances profitability improved because each company launched value-added products of energy saving, antibacterial system/coating and so forth. Home appliance sales were strong in emerging countries where their life standard has been uplifting.
Mitsubishi Electric benefited from such strong home appliance businesses in addition to the recovery of automobile related businesses and strong social infrastructure businesses in Asia. Their worldwide sales of air conditioners and other energy saving home appliances such as refrigerators were strong. This contributed to 4% increase in the operating income for April – June from a year ago for their consumer electronics business.
For the very similar reason, Toshiba’s operating profit for April – June came back to black (positive) after 9 years.
4. Which sector in consumer electronics was weak?
It is digital AV. Flat panel TV demand has been sluggish especially in Europe. Prices have dropped dramatically in most products due to severe competition. As a result, revenue and profitability deteriorated yet there is no sign of improvement for the time being.
For this reason, Panasonic, Sony and Sharp, the three companies with large portion of their business in digital AV products fell in red (negative) for April – June.
Resources:-
The recent contrasts of financial performance announcement of 8 major Japanese electronics companies attributes to which business sectors each of them focuses in. Automobile related sector recovery is above original expectation when others are not, Asia social infrastructure businesses have been strong, home appliances businesses were strong but digital AV businesses were weak.
