TOKYO, Jan 25 – Japanese consumer electronics makers are mostly forecast to post weak earnings growth for the October-December quarter, while South Korea’s LG Electronics is thought to have slumped to a loss.
While Japan’s domestic sales were buoyed by a government subsidy, the strong yen weighed on overseas earnings and Japanese giants, along with LG, are struggling to catch up with the likes of Apple and Samsung in smartphones.
Sony Corp’s quarterly profits are seen down nearly 15 per cent on the previous year, while analysts’ average forecasts from Thomson Reuters I/B/E/S show Panasonic Corp profits up just eight per cent.
After quarterly results are announced this week and next, investors will turn their attention to growth prospects for 2011, which are murky.
Growth in global sales of mainstay flat TVs is seen slowing to 11 per cent in 2011 as many markets near saturation, research firm DisplaySearch says, compared with more than 30 per cent in each of the last three years.
“Replacement of cathode-ray tube sets is nearing completion and TV prices fall every year, so for LCD TVs we see the global market peaking in 2012 in sales terms,” said Hisakazu Torii of research firm DisplaySearch.
Netherlands-based Philips Electronics this week blamed weak TV sales for disappointing quarterly profit.
In Japan, 2011 TV sales are expected to sink to about half last year’s 25 million units.
Sony, which ranks third after Samsung and LG Electronics in TV sales, has warned it may fall slightly short of its forecast of 25 million units for the year.
The TV units at both Panasonic and Sony are expected to stay in the red for the year to March.
“Sony has done a lot of restructuring to cut fixed costs, but they are still very high compared with Samsung’s,” said Takao Hattori, an analyst at research firm T.I.W. “It has taken longer than expected to turn the TV division profitable.”
Tokyo stock market’s electronics industry index has fallen more than eight per cent since the beginning of the financial year last April, largely on the strength of the yen.
A fresh blow awaits in March with the end of a Japanese government subsidy aimed at stimulating demand for environmentally friendly household appliances, which frontloaded domestic sales through the end of last year.
For TV makers, the picture is particularly dark, because most Japanese consumers have replaced their sets ahead of the July switchover to digital terrestrial broadcasting, leaving little incentive to buy.
SHARP HIT
Worst hit in the coming year will likely be domestic-focused Sharp Corp, which boasted 41 per cent of Japan’s TV sales in July-September 2010 but only eight per cent of the world market, according to DisplaySearch.
Analysts say profit will edge up this quarter but Sharp may miss its 90 billion yen (RM3.3 billion) profit target for the year to March, and income will be lower still next business year.
The maker of Quattron TVs faces weaker than expected demand for the large liquid-crystal display (LCD) panels it makes for other TV brands, as cost competition forces companies such as Sony to seek cheaper suppliers.
The sole bright spot for Sharp may be the small to medium-sized LCD panels it makes for smartphones and handheld games. Sources said last month it was considering building a new production line to meet demand.
Games giant Nintendo will likely see a steep slide in profits, as sales of its handheld DS have tumbled ahead of the launch of a new, 3D-capable version next month.
Analysts say it remains to be seen whether sales of the new model can live up to its predecessors, given that smartphones from Apple and other makers now provide inexpensive entertainment for many casual gamers. Sony is also expected to beef up competition with a new PlayStation portable, possibly to be announced this week.
Canon Inc, the world’s biggest maker of digital cameras, is expected to outperform the sector, however, with profits seen rising 15 per cent on the year-ago quarter, thanks to healthy sales backed by cost-cutting, according to average analyst estimates from Thomson Reuters I/B/E/S. – Reuters
