TOKYO Japan's Konica Minolta Holdings Inc (4902.T) said a recent strong recovery in demand for its high-tech film used in LCD panels is likely to boost its annual earnings, although it has no plans to increase its outlook now.
Brisk TV sales in China, spurred by the government's stimulus package, and the completion of panel inventory adjustments have created fresh LCD panel demand, which has led to robust orders for its LCD film, Konica Minolta Senior Executive Officer Shoei Yamana told the Reuters Global Technology Summit in Tokyo.
Its triacetyl cellulose (TAC) film, which protects the polarisation plate used in LCD panels, had been an engine of growth for Konica Minolta until global LCD TV demand slowed last year due to the economic downturn.
"Adjustment of bloated panel inventory has pretty much run its course and now panel makers are boosting production to meet strong demand from China. We are experiencing a knock-on effect from all this," Yamana said on Wednesday.
"This is a boosting factor to our annual earnings although we have no intentions of changing that outlook now."
Konica Minolta last week said it expects operating profit to fall 20 percent to 45 billion yen ($469 million) in the year to March 2010 as its corporate clients will likely continue curbing spending on copiers and printers.
That is below a consensus of a 46.7 billion yen profit in a poll of 14 analysts by Thomson Reuters.
Konica Minolta vies with Fujifilm Holdings Corp (4901.T) in TAC film and competes with Canon Inc (7751.T), Xerox Corp (XRX.N) and Ricoh Co Ltd (7752.T) in office machines.
NOT OUT OF THE WOODS YET
Despite strong Chinese demand and lower panel inventory levels, however, it remains unclear if LCD panel and panel components makers are safely on the growth path, Yamana said.
"We have not really seen any strength in end-user demand for large-screen TVs in Europe and the United States," he said.
"If panel makers turn bullish and start flooding the market again, the industry might have to go right back to the inventory adjustment phase."
Konica Minolta is developing next-generation lighting products based on organic light-emitting diode (OLED) technology with General Electric Co (GE.N).
Also, it is considering offering organic solar cells, which are bendable and cost less to manufacture than silicon-based solar cells, as there are considerable technological overlaps between developing organic solar cells and OLED lighting.
Sales of solar cells, which convert solar energy into electricity, could grow strongly as concerns about climate change boost demand for renewable energy sources.
Konica Minolta expects a tough operating environment for its office equipment business this year as corporate clients cut back on their information technology spending to cut costs and survive the recession.
But the company aims to defy the global downturn by launching cost-efficient business machines with enhanced data security functions, Yamana said.
Ahead of his comments, shares in Konica Minolta closed up 1.9 percent at 911 yen, outperforming the Nikkei average .N225, which gained 0.6 percent.
(Editing by Anshuman Daga and Rupert Winchester)