Bloomberg News

Mitsubishi Electric Falls on Forecast, Refunds: Tokyo Mover

April 27, 2012

Mitsubishi Electric Corp. (6503), the Japanese maker of air-conditioners and satellites, fell the most in almost three months after predicting lower-than-expected profit and saying refunds for overcharging may hit earnings.

The company dropped as much as 5.5 percent, the biggest intraday decline since Jan. 30. It was down 4.2 percent at 703 yen of as 2:18 p.m. in Tokyo.

Melco, based in Tokyo, predicted net income of 120 billion yen ($1.5 billion) this fiscal year, trailing the 136.5 billion yen average of 17 analyst estimates compiled by Bloomberg. The forecast excluded costs from excess charging on government contracts, which has also caused Melco to be barred from bidding on some state orders.

Refunds may have a “material effects on the Group’s future financial results,” the company said in a statement. The size of the impact is not yet clear, it said.

The overcharging issue arose in January, centered on the company’s electronic-systems business. The unit was subsequently blocked from bidding on contracts offered by the Ministry of Defense and other agencies. Four affiliates were also halted from bidding on defense ministry contracts.

To contact the reporter on this story: Neil Denslow in Hong Kong at ndenslow@bloomberg.net

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net.


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