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Business

With ATMs losing money, Oki pins hopes on contract services

Snubbed by investors, Japanese company nurturing fourth pillar of earnings

An Oki plant in Saitama Prefecture that handles the company's contract manufacturing services.

TOKYO -- Oki Electric Industry seeks to create a new earnings driver at a time when its money-losing ATM business has kept investors away and left the company's stock in the doldrums.

Oki derives much of its earnings from three sources: telecommunications services, printers and ATMs. It positions contract electronics manufacturing services as a potential fourth pillar.

Unlike major contract manufacturing service providers, the Japanese company specializes in small-scale production of a wide range of products.

Oki expects operating profit from its contract electronics manufacturing services to jump 19% to a record 2.5 billion yen ($22.2 million) in the current year ending March 2018. The company aims to raise the figure to 3.5 billion yen in fiscal 2019, up 67% from fiscal 2016, with sales seen growing 39% to 60 billion yen. It is shooting for sales of 100 billion yen eventually, according to President Shinya Kamagami.  

Oki generates annual sales of around 100 billion yen each from printers and ATMs. The figure for telecommunications services is closer to 200 billion yen.

The stock market, meanwhile, will take some time to factor in the potential of Oki's contract manufacturing business, according to one mutual fund manager. The company's stock is down almost 10% this year.

Investors won't give Oki shares a second look unless there is progress on a recovery of the company's ATM business, said Goldman Sachs' Ikuo Matsuhashi. That business logged 1.5 billion yen in red ink for the April-June quarter.

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