NEC Corp said profit will triple this year as mobile-phone earnings improve and its semiconductor unit cuts spending.
Net income will climb to 30 billion yen (US$247 million) in the 12 months ending on March 31, exceeding last year's 9.1 billion yen, Tokyo-based NEC said yesterday, according to Bloomberg News. Full-year earnings are based on Japanese accounting standards, after the company in November made the switch from United States GAAP.
NEC expects the mobile-phone unit to return to profit this year after focusing on more expensive handsets in China and closing some stores. The company, whose shares have lagged behind the benchmark Nikkei 225 Stock Average the past 12 months, last week said its computer-chip division would break even this year, after cutting research spending and outsourcing some production.
"The company should benefit from an improvement in the chip business and continuing strong demand" for communications equipment and technology services, Yoshiharu Izumi, a Tokyo-based analyst at JP Morgan Securities Asia PE, said before the earnings release. Mobile phones "should also show some improvement, helped by restructuring efforts in China."
Izumi rates the company's stock "underweight." Sales are estimated to be flat at 4.65 trillion yen, and operating profit almost unchanged at 70 billion yen.
The company in February said it had a 68-billion-yen gain from its retirement fund for the year just ended.
Net income was 16.44 billion yen in the fourth quarter ended on March 31, compared with a loss of 25.1 billion yen a year earlier. Sales fell 14 percent to 1.33 trillion yen, and operating profit slid 57 percent to 27.4 billion yen.
Figures were derived by subtracting nine-month earnings from the full-year results. Spokeswoman Diane Foley declined to provide fourth-quarter numbers.
NEC expects its mobile-phone business to post an annual profit, compared with a 35 billion yen loss in the year just ended, Chief Financial Officer Takao Ono said at a briefing in Tokyo, without providing a figure.
The company said its mobile-phone shipments will fall to five million units this year, from 5.6 million, while sales will remain flat at 350 billion yen.
Operating profit in the mobile and personal solutions unit, comprising handsets, PCs and Internet services, will probably be six billion yen, compared with a 33.5-billion-yen loss a year earlier. Sales will fall eight percent to 890 billion yen as the company withdrew from the European consumer PC business, NEC said.
The chip unit NEC Electronics Corp, Japan's third-biggest semiconductor maker, on May 14 forecast its net loss this year to narrow to 15 billion yen from 41.5 billion yen.