Slow Demand Impacts on Japan 6 Electric Wire Makers’ Results

Japanese major 6 electric wire makers posted lower consolidated recurring profit for April-June from same period of 2007 due to slower demand and higher cost. The lower demand could keep impacting on their profitability through the year to March 2009.

Sumitomo Electric Industries reported onetime negative impact on operating profit was more than 5 billion yen in April-June. The firm posted 1.3 billion yen of negative factor from higher oil price and 1.2 billion yen of negative factor from higher depreciation while the exchange loss was 8.1 billion yen. Hitachi Cable reported exchange loss was 800 million yen and higher depreciation was 700 million yen.

Lower demand suffered the makers when slower building activity decreased the consumption of electric wire while the demand slowed down for optical fiber network for household. The slowing economy also impacted on the demand for digital devices and cell phone, which reduced the demand for electronic materials.

The makers’ sales could decrease for automotive wiring harness in an after July when domestic automakers reduce the output. The building demand could keep slow through the year due to the slower economy. The electronics demand is expected to recover from July-September period due to the seasonal business cycle.

See attached table.