Fujikura Suffered from Wide Price Down of Electronic Materials

Fujikura, Japanese major maker of electric cables and electronic materials, posted wide lower consolidated operating profit for its Electronics & Auto Segment in fiscal 2006 ended March 2007 compared with fiscal 2005, which is the main business unit for Fujikura’s consolidated sales and profits. The operating margin of the segment declined to 5.1% in fiscal 2006, which became to below 10% for the first time since fiscal 2002, when the selling prices of flexible printed circuits (FPCs) and connectors dropped down with strong cost cut offers from the users. Kazuhiko Ohashi, president of Fujikura, intended to recover operating margin to above 10% for the Segment in the second half of fiscal 2007.The selling price especially decreased for FPC, which accounts for approximately 40% in the total sales of the Electronics & Auto Segment. The firm explained FPC shipment volume increased in fiscal 2006 compared with fiscal 2005 but the sales value kept flat at 90 billion yen due to the sharp decline of FPC’s unit price.Additionally material costs expanded in fiscal 2006. As a result, the consolidated sales of the Electronics & Auto Segment totally increased by 22% to 241 billion yen in fiscal 2006 from fiscal 2005 while the operating profit halved to 12.4 billion yen in fiscal 2006 from 24.7 billion yen in fiscal 2005.Mr. Ohashi explained FPC’s price down was especially large in January-March 2007. He also pointed out Fujikura’s FPC supply capacity became surplus at Thai productive subsidiary against the world market demand in fiscal 2006. Lower operating rate caused lower operating profit, he suggested.Fujikura tries to receive FPC orders to improve operating rate of productive equipment in Thai and Chinese subsidiaries. The firm received many new orders for FPC this month and expects the operating profit could recover gradually in and after July-September.