Date: 27 May 2008
Net income may fall 60 percent to 20 billion yen ($192 million) for the year started April 1 from 50.4 billion yen a year earlier, the Tokyo-based company said in a statement today. Sales may gain 1.7 percent to 880 billion yen. The stock dropped the most in more than four months after the forecast.
Incoming President Stuart Chambers, the former head of St. Helens, England-based Pilkington, will have to combat higher costs for oil and natural gas and lower prices in Europe and this year. Nippon Sheet Glass is trimming its workforce in Japan, where profitability is about an eighth of the level in Europe.
``I expect more cost-reduction measures to be taken under the new management,'' said Katsuhiko Ishibashi, an analyst at Deutsche Securities Inc. in Tokyo. He rates the stock a ``hold.''
The shares fell 8.3 percent to 462 yen at the close of trading on the Tokyo stock exchange, the biggest decline since Jan 16. The stock has lost 19 percent of its value this year, compared with an 8 percent drop in the benchmark Nikkei 225 Stock Average.
Operating Profit
Operating profit, or sales minus the cost of goods sold and administrative expenses, for the year may fall 33 percent to 31 billion yen, the company said in the statement. Higher energy costs will probably erode operating profit by 23 billion yen this year, the biggest factor for the profit drop, Chambers, 51, told reporters in Tokyo today. Lower sales prices may reduce earnings by 6 billion yen, he said.
Nippon Sheet Glass based its forecast on an average rate of 210 yen to a British pound and 155 yen to a euro.
The company's fourth-quarter net loss narrowed to 10.4 billion yen from a 16.1 billion yen loss a year earlier, while sales gained 11 percent to 216.9 billion yen. Operating profit rose more than fivefold to 5.6 billion yen. The figures were derived from annual results reported today.
It will take two to three years before Nippon Sheet Glass obtains the benefits of the cost-cutting measures, Chambers said.
``There are a number of ways to compensate for such a cost push, but this cannot be achieved in a short time,'' he said. `We'll need more time.''
Job Cuts
Nippon Sheet Glass said on May 7 it will cut 220 jobs, or 27 percent of its managers in Japan, through early retirement by July 31 to save labor costs. Chambers will replace Katsuji Fujimoto effective June 27. Under the new management, 13 out of 24 top officers in the company will be foreigners, including eight British nationals.
``Things will be better in the mid term, as the new president has know-how of global expansion,'' Ishibashi said.
Full-year profit quadrupled to 50.4 billion yen, or 75.44 yen a share, from 12.1 billion yen, or 21.85 yen, a share a year earlier, helped by revenue from Europe and gains from the sale of an Australian unit. Sales rose 27 percent to 865.6 billion yen, while operating profit almost doubled to 46.5 billion yen.
Click on the link bellow to read the entire article.
![](/themes/custom/glassonweb/images/glassonweb.png)
Add new comment