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TOKYO : Japan's Sanyo Electric Co. reported its first annual net profit in four years on Thursday after drastic streamlining helped return the struggling electronics maker to the black.
The Osaka-based company expects further bottom line growth this year on the back of rising sales of digital cameras and rechargeable batteries.
Sanyo has slashed thousands of jobs and sold non-core operations as part of a massive overhaul in recent years, while increasing its focus on rechargeable batteries.
The revamp appears to be paying off, with the company posting better than expected net profit of 28.7 billion yen (278.4 million dollars) for the fiscal year to March, against a year-earlier loss of 45.4 billion yen.
Operational profit jumped 78.7 percent to 76.1 billion yen, while sales rose 7.2 percent to 2.02 trillion yen.
"Despite the yen's strengthening and the rising costs of raw materials, cost cuts and growing contributions from such products as digital cameras, flat-panel TVs and car navigation systems helped us turn around our earnings substantially," Sanyo Electric president Seiichiro Sano told a news conference.
The group slashed its group workforce by more than 10 percent last year and sold its loss-making mobile telephone manufacturing business to rival Kyocera and its finance subsidiary Sanyo Electric Credit to Wall Street giant Goldman Sachs.
It expects the recovery in its bottom line to continue in the current fiscal year to March 2009, forecasting a 22 percent rise in net profit to 35 billion yen.
Operating profit, however, is expected to drop to 50 billion yen on steady revenue of 2.02 trillion yen.
The company expects the stronger yen and higher raw material and fuel costs to undermine overseas earnings.
Sanyo, which started out making bicycle lamps after World War II, has been under pressure from heavyweight institutional investors to restructure its business and return to profit.
A scandal over alleged window-dressing of its accounts, which forced the company to correct six years of earnings reports in December, only added to its woes.
It issued several billion dollars worth of shares to Goldman Sachs, Daiwa Securities SMBC and Sumitomo Mitsui Bank in 2006 to shore up its capital base.
Sanyo has earmarked 122.5 billion yen for capital spending this year, up 54 percent from last year, to try to expand its battery and solar panel segments.
"We saved on capital spending and focused on steps to revamp our earnings in the past three years, and are now moving forward to step up capital spending aggressively," Sano said. - AFP/de
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