HS&T to Improve Construction Cable Profitability

Sumiden Hitachi Cable (HS&T), a joint venture among Hitachi Cable, Sumitomo Electric Industries and Tatsuta Electric Wire & Cable to sell low voltage cables for construction markets, aims to improve the business profitability in fiscal 2007 started April by severer management of order backlogs and prices. Masamichi Morishima, president of HS&T, explained the management plan for fiscal 2007 to Japan Metal Bulletin.Mr. Morishima explained HS&T posted net sales of approximately 115 billion yen in fiscal 2006, up to 1.5 times from 79.5 billion yen in fiscal 2005 thanks to copper price upsurge and HS&T’s efforts to improve the selling prices of construction cables. However, he pointed out HS&T’s cable sales downed to 97-98% in copper volume from previous year when extremely high copper price impacted the spot sales for wholesalers.He told HS&T was suffered from heavy losses through fiscal 2006 due to unstable copper price. In April 2006 Japanese official copper price jumped up by 220,000 yen to 910,000 yen per tonne within a month and HS&T could not pass cost expansion on the cable selling prices enough. After mid November copper price dropped down and the firm received losses from gap between expensive inventory prices and cheap selling prices.Mr. Morishima said HS&T tries to obtain the moderate price level to cover higher copper costs and to review management system for order backlogs in fiscal 2007. Especially HS&T aims to review trading customs in long-term contracts with electric contractors for large buildings. Mr. Morishima explained the firm manages delivery volume and date more severely in the long-term contracts. At the same time HS&T continues minimization of the inventories and order backlogs by offering group cable makers to shorten productive lead time.