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Nippon Sheet Predicts First Profit Drop in Five Years

Post Time:May 26,2008Classify:Company NewsView:398

May 23 (Bloomberg) --

Incoming President

``I expect more cost-reduction measures to be taken under the new management,'' said

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

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

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

``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.

Nippon Sheet Glass had an 8 percent operating profit margin in Europe for the year ended March 31, compared with 0.94 percent for Japan. Europe became Nippon Sheet Glass's largest market after the company bought U.K-based Pilkington. Nippon Sheet in June sold its Pilkington units in Australia and New Zealand to

Asahi Glass Co., a local rival of Nippon Sheet Glass, reported a 4.4 percent profit decline in the January to March quarter because of currency losses and falling sales of construction glass in Europe.

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Source: BloombergAuthor: admin

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