June 25, 2014 2:00 am JST

Kyocera sets sights on 200 billion yen profit in fiscal 2017

OSAKA -- Kyocera Corp. aims to boost pretax profit by around 40% over the fiscal 2013 figure to more than 200 billion yen ($1.94 billion) in fiscal 2017, says President Goro Yamaguchi.

     The Japanese ceramics maker will work to sell more components for smartphones as well as for solar power generation, a growth area. The company's strategy calls for ensuring a steady stream of earnings from smartphone parts by increasing business from Chinese manufacturers of the handsets.

     If met, the fiscal 2017 target would mark the highest-ever pretax profit for Kyocera, with the exception of fiscal 2000's 400.2 billion yen, which was pumped up by higher equity earnings from a stake in KDDI Corp. Kyocera follows U.S. accounting standards.

     The company seeks to ratchet up sales by 38% over the fiscal 2013 sum to a record 2 trillion yen for the year through March 2018. Kyocera's target calls for locking in a pretax profit margin of 10%. Last fiscal year, the company achieved a margin of 10.1%, meeting the target for the first time since fiscal 2010, when the figure was 13.6%.

     Growth will be driven by semiconductor components and telecommunications equipment, which together account for about 40% of sales. In the former segment, Kyocera will expand sales across a range of areas, including parts for use in smartphones, tablets and automobiles.

     Apple is widely expected to release a new iPhone this fall. Noting that Kyocera has a track record of supplying parts to the U.S. consumer electronics giant, Yamaguchi says the Japanese company is "making preparations, with the new (iPhones) in mind."

     But as Yamaguchi also points out, "major players' share of the smartphone market is falling, even as that of Chinese and other manufacturers rises." While Kyocera doesn't disclose sales by customer, the president said "increased reliance on major (smartphone makers) could lead to bigger swings in" Kyocera's earnings. The company thus aims to win more clients among Chinese and other smartphone manufacturers.

     The company's solar-power-related business, meanwhile, continues to face falling prices for panels and electronic components, amid fierce competition. Leveraging the strength of a comprehensive production process that starts with raw materials and ends with finished products, Kyocera will respond to the trend by "lowering costs by 10%," Yamaguchi says.

     Kyocera aims to raise sales from autoparts to 300 billion yen in fiscal 2016, double the fiscal 2013 sum. The company seeks to boost sales of LCD displays, in-car cameras and other products, in addition to semiconductors, seizing on higher demand from carmakers, which are increasingly outfitting vehicles with a variety of electronic features.

     The company plans to maintain its payout ratio target, which was raised last fiscal year to 30% or more.

(Nikkei)