Japan Major 6 Electric Cable Makers to Regain Profits in Fiscal 2H

Japanese major 5 electric cable makers posted consolidated recurring loss for the first half of fiscal 2009 (April-September) except for Fujikura. Their profits improved or losses shrank for July-September thanks to their cost cut measures and sales recovery for automobile and electric appliance industries. For a full fiscal year ending in March 2010, 5 cable makers other than SWCC Showa Holdings target to regain consolidated recurring profits. For the second half year, all of 6 makers are expected to turn into the black. Meanwhile, there exist several concerns that the demand may decline for January-March 2010 and strong yen exchange rate would reduce makers’ sales and profits.

They have tried to reduce fixed costs, mainly employment costs, since the second half of fiscal 2008. Cost cut measures contributed to improvement of consolidated operating profits in 1H of F2009; 23.2 billion yen at Sumitomo Electric Industries (SEI), 8 billion yen at Furukawa Electric, 20 billion yen at Fujikura and 9.4 billion yen at Hitachi Cable compared with 1H of F2008. These effects were almost canceled by profit shrinkage led by low sales.

Sales volume turned upward in June mainly for automotive parts and electronic materials, including automotive wiring harness, flexible printed circuit and copper alloy strip. As to telecommunication business, SEI, Furukawa Electric and Fujikura enjoyed active sales of optical fiber and related products. Optical fiber export was especially strong.

In 2H of F2009, car market is concerned to slow down when scrap incentives come to ends in many countries. Demand for electronic materials is unforeseeable in January-March, when the demand usually declines after Christmas selling season. Even telecom business is expected to slow down in 2H along NTT’s investment pace down for NGN (next generation network). Underlying trend of strong yen also impacts sales and profits of exporting products.