May 13, 2008 / 5:33 AM / 12 years ago

Hitachi losses grow, forecast below expectations

TOKYO (Reuters) - Japan’s Hitachi Ltd (6501.T) tumbled to a quarterly loss on slow TV sales and a tax writedown but said it would rebound to a profit this year, and its shares were up 5 percent.

Japan’s biggest industrial electronics company aims to outrun a stronger yen and price falls this year with cost cuts at its hard drive and plasma TV operations and with solid sales of elevators, excavators and power systems.

For the financial year to next March, Hitachi said it expected a net profit of 40 billion yen ($386 million), against a net loss of 58.13 billion yen the previous year but missing the mean 64.5 billion yen profit estimate of 10 analysts surveyed by Reuters.

On an operating basis, Hitachi said it expected profit to rise 10 percent to 380 billion yen this year.

After the announcement, shares of Hitachi held earlier gains and were up 5.2 percent at 714 yen, against a 2 percent rise in Tokyo’s electrical machinery subindex .IELEC.T.

“A 10 percent rise — if they can achieve this, that’s not bad at all. There was some talk that they’d be much more conservative,” said Tomomi Yamashita, a fund manager at Shinkin Asset Management Co

Hitachi, whose products range from nuclear turbines to washing machines, has promised to trim its sprawling empire of 911 subsidiaries.

Eyeing weakening demand from the United States, it swallowed massive appraisal losses and a tax writedown in January-March, which caused it to fall to a quarterly net loss of 57.6 billion yen, compared with a 44 billion yen profit a year earlier.

Hitachi, the world’s No. 4 maker of plasma TVs, faces a tough year as bigger rivals such as Panasonic maker Matsushita Electric Industrial Co Ltd (6752.T) and LG Electronics Inc (066570.KS) churn out cheaper products.

In hard drives, where it is the world’s No. 3 maker after Seagate Technology STX.N and Western Digital Corp WDC.N, Hitachi seeks to grab market share with high-storage drives while cutting production and distribution costs to beat price falls.

Shares of Hitachi lost 35 percent in the business year to March 31, while those of closest rival Toshiba Corp (6502.T) fell 15 percent and the electrical machinery subindex fell 28 percent.

Additional reporting by Elaine Lies; Editing by Louise Heavens and Chris Gallagher

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