http://www.japantoday.com/category/busi ... t-drops-67
TOKYO — Sanyo Electric Co, a troubled electronics maker that may get bought out by bigger Japanese rival Panasonic, reported Wednesday its second quarter profit dwindled to about a third of what it was a year earlier.
Net profit for the July-September period slumped 67% to 4.4 billion yen from 13.4 billion yen as a stronger yen and rising raw material costs hurt earnings. Last year, the sales of shares in Sanyo Electric Credit Co had propped up profits, but that was absent this year.
Still, the Osaka-based manufacturer stuck to its forecast for the fiscal year ending March 31, 2009, of 35 billion yen profit, up 22% from the previous year.
Sanyo had been seen as a relative loser in Japan’s crowded electronics sector until hopes surfaced recently about a takeover by cash-rich Panasonic Corp.
Analysts say Panasonic has much to gain by getting its hands on Sanyo’s prized lithium-ion battery and solar panel businesses—both green energy endeavors that could prove lucrative.
Lithium-ion batteries are a key component in environmental cars, and solar panels are an alternative electricity source for homes.
Both Sanyo and Panasonic have denied anything has been decided following weekend Japanese media reports, including top business daily The Nikkei, which said the companies were in talks about a possible deal.
Sanyo’s July-September sales inched down 0.8% to 527 billion yen as sales held up in its key batteries and solar panel businesses.
Sales were also good in flat-panel TVs, washing machines and digital cameras despite tough times, said Sanyo President Seiichiro Sano.
“We feel that we are in the intermediate step in the process toward accomplishing the new midterm management plan,” he said of the company’s recovery strategy.
Sanyo has been restructuring its shaky operations in recent years, cutting jobs and selling its mobile phone business. It swung back to profit in the fiscal year ended March after losing money for four years.
Sanyo received a bailout from Goldman Sachs of the U.S. and two Japanese financial firms, Sumitomo Mitsui Banking Corp and Daiwa Securities SMBC, in 2006. The fact that such financial companies that need cash hold a combined 70 percent stake may work in Panasonic’s favor in cutting a deal.
Sanyo has also battled an accounting scandal last year over falsifying earnings reports, which forced a reshuffle of its top management.