J-Power Systems to Improve Cost Structure, Profitability

Japanese high voltage electric cable makers try to improve the competitiveness when the price competition gets severe in the international market. J-Power Systems, which is high voltage electric cable making 50/50 joint venture of Sumitomo Electric Industries and Hitachi Cable, decided to reduce the cost to secure profit under the severe market while the firm should post lower profit for the year ending March 2011. The firm tries to keep high level utilization to improve the profitability.

The firm expects the profit in the year to March 2010 is same level or slightly higher than the level in previous year while the sales will be 79 billion yen. The electric wire shipment will decrease slightly to 22,000-23,000 tonnes in copper volume. The firm expects the order receipt could be severe especially for export in the year to March 2011.

South Korean electric wire makers try to get order at low price for major power transmission projects in Near East and Middle East. Local makers in Egypt and Saudi Arabia entered the market up to 220,000 volt class electric wire. With such new players, the price competition gets severer in past one year while the projects and demand keeps strong.

J-Power Systems operates the domestic plants for around 5 days a week. The firm tries to get new order to keep the operation level in the year ending March 2011 and especially for the second half when the order backlog decreases. The firm also tries to reduce the cost in procurement and back office to improve the cost competitiveness and profitability.

J-Power Systems expects the start of new Indian plant and Saudi Arabian plant will delay from the original schedule due to delay of the land purchase. The Indian cable making joint venture plant is already completed in late 2010 starting the operation in mid-2011 after test running and approvals from the users of power companies. The Saudi Arabian plant will start the operation in spring 2011.