Hitachi Ltd. (6501), Japan’s second-largest manufacturer, predicted a 16 percent jump in annual operating profit helped by overseas demand for thermal-power stations and a rebound in production following natural disasters last year.
Operating profit may rise to 480 billion yen ($6 billion) in the year ending March 31 from 412.3 billion yen a year earlier, the Tokyo-based company said in a statement today. That was in line with analyst estimates. Net income may drop 42 percent to 200 billion yen after a year-earlier one-time gain from the sale of a hard-disk drive unit.
Demand for coal-fired power stations in emerging markets will help Hitachi’s power-systems business return to profit following a loss caused by difficulties with boilers and project delays in Europe last year. The maker of trains, auto-parts and air-conditioners also suffered factory disruptions in 2011 because of floods in Thailand and a tsunami in Japan.
“Hitachi should increase its focus on emerging markets to expand sales,” said Mitsushige Akino, who oversees the equivalent of about $600 million in assets in Tokyo at Ichiyoshi Investment Management Co. “It should be able to leverage the strength of its power-generation equipment and train-making units.” Akino holds Hitachi shares, he said.
Sales may drop 5.9 percent to 9.1 trillion yen, Hitachi said. The company was expected to predict operating profit of 484.9 billion yen, based on the average of 20 analysts’ estimates compiled by Bloomberg.
The power-systems unit will probably make an operating profit of 22 billion yen this fiscal year, compared with a 33.9 billion yen loss a year earlier, Hitachi said. Revenue from overseas and renewable-energy equipment will offset waning demand for nuclear power systems, and thermal-power equipment in Japan, the company said.
Hitachi climbed 1.7 percent to 484 yen in Tokyo trading today, ahead of the earnings announcement. It has risen 20 percent this year, compared with a 6.6 percent increase for the benchmark Nikkei 225 Stock Average.
The company expects its digital media and consumer products division to break even this year as it restructures TV-making operations to counter a stronger yen and competition from Samsung Electronics Co. and LG Electronics Inc. The unit, which also makes home appliances and air-conditioners, plans to stop making TVs in Japan in September.
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