Hitachi forecasts record profit, confident on China, U.S. demand
TOKYO (Reuters) - Hitachi Ltd (6501.T), Japan's largest electronics conglomerate, raised its full-year earnings forecast on Tuesday, putting it on course to break through a 23-year-old profit record as the automotive and construction sectors boosted its earnings.
The company also said it was confident about demand from China and the United States, shrugging off increased investor concern over growth in the world's two top economies.
"If there's a hard landing in China, it will be felt in Europe, the U.S. and Asia, so I think at the G20 and elsewhere there will be efforts to make sure this doesn't happen," Hitachi Executive Vice President Toyoaki Nakamura told an earnings briefing.
He also dismissed worries about the U.S. economy, which was hit by unusually cold weather last month and faces a tapering of the Federal Reserve's quantitative easing.
"We don't think there are any major problems," he said. "U.S. consumption accounts for 70 percent of GDP so when sentiment turns negative, corporate activity can't really be positive, but it doesn't seem to be that bad."
Hitachi, a sprawling industrial group that is one of Japan's largest private-sector employers, now projects an operating profit of 510 billion yen ($5.04 billion) for the year to end-March, up from its previous outlook of 500 billion yen and exceeding its 1990/91 record of 506.4 billion.
The new forecast remains below the average estimate of 526.9 billion yen from 20 analysts, according to Thomson Reuters StarMine, but Nakamura said it was a conservative outlook, and it may be increased further.
Hitachi also posted a 79 percent rise in October-December operating profit to 122 billion yen, powered by strong sales of automotive components and construction equipment.
The upbeat result mirrored strong results the same day from Panasonic Corp (6752.T), which has been restructuring to ditch unprofitable consumer businesses and focus on more lucrative work supplying automakers and other industrial customers.
Hitachi racked up nearly 1 trillion yen ($10 billion) in accumulated net losses in the four business years from 2007/08 to 2009/10 before embarking on a drastic reorganization to improve its profitability.
Hitachi's shares slid 4.8 percent before the earnings announcement to 749 yen, in line with a 4.2 percent drop in Japan's benchmark Nikkei average .N225. The shares are up nearly 50 percent since the start of last year, outperforming the Nikkei's 35 percent gain but short of Panasonic, which has more than doubled.
(Reporting by Yoshiyasu Shida; Editing by Edmund Klamann and Louise Heavens)
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