Sumitomo Electric to Improve Profitability for F2010

Sumitomo Electric Industries’ president Masayoshi Matsumoto said on Friday the firm expects better results in first half of fiscal 2010 starting April 2010 if the market condition keeps current position for second half of fiscal 2009. The operating profit rate on sales will be 4% in second half of fiscal 2009 compared with 3.9% in first half of fiscal 2008 when the demand recovers for automobile and electronics industry while the firm tries to improve the cost structure.

The firm revised the outlook upward to 1.8 trillion yen of consolidated sales and 33 billion yen of operating profit for fiscal 2009. Mr. Matsumoto said the firm should secure 33 billion yen of operating profit by securing 987.7 billon yen of sales and 40 billion yen of operating profit for second half year.

The automobile business unit, of which main item is automotive wiring harness, posted 5.5 billion yen of operating profit for July-September compared with 8.6 billion yen of loss in April-June. The unit expects 425.6 billion yen of sales and 20.1 billion yen of operating profit for second half of fiscal 2009.

The industrial materials unit posted 500 million yen of operating profit for July-September compared with 3.9 billion yen of loss in April-June. The firm revised the outlook upward to 500 million yen of operating profit for fiscal 2009 from original outlook with 3 billion yen of loss.

Mr. Matsumoto said the automobile demand could slow in 2010 when automakers plan to reduce the output by 20-30% in April-June 2010 from January-March. He said the firm tries to secure the profitability after April 2010.

The electronics unit posted 1.9 billion yen of operating profit for July-September compared with 2.1 billion yen of loss in April-June thanks to higher demand for flexible printed circuit and electric wire for electronic equipment. The unit expects 92.3 billion yen of sales and 4.7 billion yen of operating profit for second half year.