Furukawa Electric Activates Strategic Capex in F2007

Furukawa Electric activates capital expenditure into the overseas operation sites and the strategic business fields such as automotive parts, telecommunication and electronics. The firm has planned annual capex of 56.6 billion yen for fiscal 2007 ending March 2008, increasing from 41.8 billion yen in fiscal 2006, as well as utilization of strategic funds of 20 billion yen which the firm raised in 2005 and has consumed 15 billion yen so far. Hiroshi Ishihara, president of Furukawa Electric, explained the current management conditions to Japan Metal Bulletin.Furukawa Electric’s consolidated operating profit decreased by 100 million yen for April-June 2007 compared with the corresponding period of 2006 while the consolidated net sales increased. Mr. Ishihara said the demand slowed down for optical network components in 1Q of 2007 while the demand was very strong a year earlier. On the other hand, he explained, the overseas sites posted favorable profits at such plants for optical fiber cables in Brazil and USA, high-voltage electric cables and heat sinks in China, copper tubes in Thailand and electrolytic copper foils in Taiwan.OFS, Furukawa Electric’s subsidiary to produce optical fibers and cables headed in USA, is increasing optical cable output capacity at Russian and German plants. Mr. Ishihara said the output capacities doubles at both plants and the expanded equipment starts operation at Russian site this autumn.As to utilization of the remained strategic funds of 5 billion yen, Mr. Ishihara suggested the fund might be invested for glass substrate business applied to computer hard discs. Furukawa Electric has supplied aluminium substrate for hard discs but, he said, there is a material shift trend for hard discs from aluminium to glass partly. The firm plans to supply both aluminium and glass substrates in future. The concrete schedule is still not fixed for the commercialization of glass substrate, Mr. Ishihara said. However, the firm examines to carry the strategic funds into the business.

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