Toshiba Corp. (6502) rose the most in seven months in Tokyo trading after saying it will no longer produce televisions in Japan, as falling prices and the strong yen erode earnings at the company’s unprofitable TV-making unit.
Toshiba climbed 5.6 percent, the most since Oct. 7, to close at 322 yen on the Tokyo Stock Exchange. The company halted output at its sole domestic TV factory in Saitama, north of Tokyo, in the year ended March 31, Atsushi Ido, a spokesman, said by phone today, declining to specify the date. The Tokyo-based company will still make TVs at four factories overseas, including plants in China and Indonesia, he said.
Japanese electronics makers including Sony Corp. (6758), Panasonic Corp. (6752) and Toshiba are suffering from falling TV sales as prices drop and a stronger yen reduces overseas earnings and competitiveness. Toshiba’s TV business may remain unprofitable this fiscal year after losing about 50 billion yen ($623 million) a year earlier, the company said May 8.
“It’s a positive move,” said Mitsushige Akino, who oversees about $600 million at Ichiyoshi Investment Management Co. in Tokyo. “The company should just abandon overseas TV production altogether and have them built by Chinese or Taiwanese companies.”
Toshiba will cut the number of TV models it sells by 60 percent in 2013 from 2011, it said in a statement today. The maker of Regza brand TVs will also outsource more production, President Norio Sasaki said in a presentation in Tokyo.
“The drop in demand for televisions was more than we expected,” Sasaki said.
The company can still make a profit from TVs and has no plans to withdraw from the business, he said.
Operating Profit Target
Toshiba aims to boost overall operating profit, or sales minus the cost of goods sold and administrative expenses, to 450 billion yen in the the year ending March 2015 from 206.6 billion yen last fiscal year, it said in a statement today. The company’s electronic-devices business may generate 180 billion yen in operating profit, it said.
Toshiba said it’s targeting total sales of 7.8 trillion yen in the 12 months starting April 2014.
The company delayed a revenue target of 1 trillion yen at its nuclear business to fiscal 2017 from fiscal 2015, after orders from nuclear businesses slowed following the March 2011 nuclear disaster at Fukushima, it said today.
Global TV shipments fell last year for the first time in six years because of excessive inventory in the U.S. and Europeand the end of Japanese government subsidies for purchases, according to DisplaySearch, part of NPD Group. Shipments fell 0.3 percent to 247.7 million units, the researcher said.
Tokyo-based Hitachi Ltd. (6501), which posted a record profit last fiscal year, plans to have other companies take over domestic production of its Wooo televisions later this year.
Toshiba was the sixth-biggest maker of flat-panel TVs last year with a 5.1 percent share in the global market, down from 5.7 percent in 2010, according to DisplaySearch.