ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintSite TitleTitle ChevronIcon Twitter
Japan-Update

Japanese electronic parts makers see better fiscal 2016 earnings

Companies diversify to guard against slowing smartphone growth

Yoshitaka Fujita, Murata Manufacturing's executive deputy president, at a news conference.

OSAKA -- Five of six Japanese electronic parts producers have upgraded net profit projections for fiscal 2016 on increased shipments seen at the end of last year, but an anticipated slowdown in smartphone components is forcing them to diversify operations.

The six companies' projections show aggregate net income staying roughly flat at around 588 billion yen ($5.19 billion), a turnaround from a previously forecast 21% year-on-year drop, based on estimates announced through Tuesday.

TDK now estimates net income at 145 billion yen, 2.2 times the previous year's. Alps Electric pared back a projected slide to 21%, estimating a 31 billion yen net profit. Kyocera likewise tempered its predicted drop to 17%, with 90 billion yen. Nidec added 5 billion yen to its forecast, for a 17% rise. Nitto Denko also upgraded its net income forecast, while Murata Manufacturing alone maintained its guidance.

The companies sent more parts in the October-December quarter, making up for a slump seen through September. Shipments of parts used in Apple's new iPhone apparently did not start in earnest until the previous quarter. The yen depreciated rapidly during this period, providing a tailwind.

Still, many see a rough road ahead. "Shipments appear simply steady, but profitability has not improved much," Nitto Denko board member Toru Takeuchi said.

While Nitto Denko upgraded its forecast, its figures included a lump-sum payment of $100 million from a collaboration with an American company. TDK likewise logged roughly 150 billion yen from selling operations in high-frequency devices. Kyocera downgraded its operating income forecast on poor performance in solar power equipment.

Shipments for Apple products appear to have already peaked, and many believe that shipments for Chinese smartphone makers "will fall after the Lunar New Year," said Tetsuji Yamanishi, a TDK director.

Now components makers are weaning themselves off supplying smartphones. TDK plans next fiscal year to purchase an American sensor maker for about 150 billion yen in hopes of raising sales for automotive and other applications. Murata will acquire Sony's battery business in April.

But such acquisitions do not boost income right away. "It would be difficult to turn an operating loss into a profit next fiscal year" for the Sony battery business, said Yoshitaka Fujita, executive deputy president at Murata. Electronic parts makers' earnings could stay flat next fiscal year.

(Nikkei)

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Get Unlimited access

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends July 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media