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TDK headed for 40% profit rebound in fiscal 2018

Rechargeable smartphone batteries seen driving growth

TDK will increase capital investment to expand capacity for rechargeable smartphone batteries.   © Reuters

TOKYO -- Japanese electronic parts maker TDK appears on track to generate 120 billion yen ($1.06 billion) in operating profit for fiscal 2018, up 40% from the forecast for the current year through March, thanks largely to brisk sales of rechargeable smartphone batteries.

Sales are expected to rise nearly 10% during the year starting in April 2018, topping 1.3 trillion yen. Customers such as U.S. company Apple and Chinese smartphone makers should produce strong demand for TDK's mainstay batteries.

Such growth would constitute a rebound from the current fiscal year, in which TDK's operating profit likely will plunge 59% to 85 billion yen. The company logged proceeds in fiscal 2016 from selling a high-frequency parts business, lifting profit to 208.6 billion yen.

TDK recently said it will devote another 10 billion yen to capital investment for fiscal 2017, raising the total to 170 billion yen for a 1% increase on the year. The company intends to boost output of rechargeable batteries, seeking to compete better against rival Samsung SDI. Proactive investment amid a profit decline will bear fruit next fiscal year.

U.S. sensor company InvenSense, which TDK acquired for about 150 billion yen, also is expected to contribute to the earnings growth seen for next fiscal year.

For the current year, InvenSense likely will sustain an operating loss of just over 10 billion yen due to depreciation charges linked to inventory valuation and the payment to some staffers who resigned at the time of the acquisition. But such one-time spending will run its course by the end of fiscal 2017, and the company's sensors likely will enjoy greater sales in China and elsewhere next fiscal year.

TDK's amortization charge for intangible assets, including technologies obtained from InvenSense, will total 1 billion yen to 2 billion yen this fiscal year. This element is not factored into the company's earnings projection but likely will be absorbed by greater sales of rechargeable batteries and other products.


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