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Hitachi expects 50% drop in net profit due to UK nuclear woes

Company reduces total hit with sales of stakes in other investments

Workers build a Fukushima decommissioning robot at a Hitachi-GE joint venture in Japan. The Japanese industrial group's overseas nuclear business has stalled. (Photo by Takuya Imai)

TOKYO -- Hitachi now expects net profit to fall by half to 180 billion yen ($1.64 billion) for the year ending in March, upgrading its estimate thanks to share sales that cushioned the blow of a U.K. nuclear business write-down.

The Tokyo-based industrial group on Friday upgraded its estimate by 80 billion yen, or $730 million, to reflect the sale of stakes in a British train-leasing company and a unit that makes lithium-ion batteries for autos.

This comes just two weeks after Hitachi said it was freezing the Wylfa Newydd nuclear power plant project and slashed its full-year net profit projection to 100 billion yen from the earlier 400 billion yen forecast, owing to a 300 billion yen impairment charge.

Revenue and operating profit projections remained unchanged on Friday. Revenue is expected to come in little changed at 9.4 trillion yen, and operating profit is forecast to climb 5% to 750 billion yen.

The operating profit figure would mark a second straight annual record. Hitachi expects to achieve the operating profit margin target of 8% laid out in its medium-term business plan.

But performance varies widely from segment to segment. Information and telecommunication systems are faring well, as demand grows for its Lumada "internet of things" platform, which competes with industrial software from General Electric and Siemens. Train systems are driving growth in the infrastructure and industrial systems segment.

Meanwhile, the advanced materials and components segment has struggled, with listed unit Hitachi Chemical seeing lackluster demand for electronic materials used in smartphones. Automotive systems have languished as Hitachi Metals suffers a decline in demand for automotive materials. Auto parts sales have lost momentum in China.

Hitachi had included a 20 billion yen buffer in its earnings projection to cope with risks including U.S.-China trade friction. This  buffer has been exhausted by the poorly performing segments.

"The macroeconomic outlook is uncertain, but we will further improve profitability by cutting unit costs and investing in growth fields," Chief Financial Officer Mitsuaki Nishiyama said.

Hitachi also said Friday that April-December net profit tumbled 68% on the year to 82.6 billion yen. Revenue rose 2% to 6.78 trillion yen.

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