Japan Battery Makers Suffered from Worse Profitability in 1Q

GS Yuasa Corporation and Furukawa Battery, Japanese major battery makers, posted less profits in April-June 2007 compared with the corresponding period of 2006, while Shin-Kobe Electric Machinery, another major battery maker in Japan, enjoyed better sales and profits. GS Yuasa and Furukawa Battery were suffered from worse profitability when they failed to pass cost expansion for lead metal on their selling prices enough.GS Yuasa posted operating loss of 1.272 billion yen in April-June 2007 for its battery business. The loss was 593 million yen in the corresponding period of 2006. The firm was suffered from lead cost expansion and severer competition especially for automotive batteries even though the sales and profits were favorable for industrial batteries. Furukawa Battery, whose main product is automotive battery, posted recurring loss of 750 million yen in April-June 2007 compared with 550 million yen in April-June 2006.On the other hand, Shin-Kobe Electric Machinery enjoyed higher sales and profits. The recurring profit increased by 31.5% in April-June 2007 from the corresponding period of previous year thanks to the earlier achievement of price hike for automotive batteries and commercialization of new products.The 3 makers have already announced price hike for automotive repairing batteries by more than 20% effective in August-September. However, the makers are likely to face strong disapprovals from the users since the previous hike was adopted only a half year ago. Some battery makers examine an introduction of a new price system along which the material price fluctuation can be automatically reflected on the price every term.