Furukawa Electric Aims Next Growth toward F2009

Furukawa Electric started the new mid-term management plan “Innovation 09” for fiscal 2006-2009 ending March 2010, which started one year earlier than originally planned and targets the next growth phase for the firm. Furukawa Electric achieved the recovery of the operation profit from the loss for the telecommunication business segment and the dividend resumption for the first time in these 3 fiscal years at the end of fiscal 2005. The firm aims to post the first operation profit at its US telecom business subsidiary, OFS in fiscal 2006, the first year of the new mid-term plan. OFS’ profitability has gradually improved thanks to the active investment for optical networks worldwide. Hiroshi Ishihara, president of Furukawa Electric, explained the current business conditions to Japan Metal Bulletin.Mr. Ishihara said the telecom business segment could post the operation profit in fiscal 2005 thanks to the favorable demand for Fiber-to-the-Home related optical products. He expects the US subsidiary, OFS could post the operating profit for fiscal 2006 as originally planned in the previous mid-term management plan from fiscal 2004. OFS might post the first profit since the acquisition by Furukawa Electric. Mr. Ishihara explained OFS gained more sales than expected currently. He pointed out the optical network market became gradually active not only in the USA but in Europe. He said OFS has a production base of optical fiber in Europe and could take advantage in covering the local market.Furukawa Electric aims 1 trillion yen of consolidated net sales during the new 4-year management plan. Mr. Ishihara said the firm should increase both sales and profits to generate the positive business growth cycle including ensuring enough employees and the enough investment for research and development. He said that the firm seemed to post 1 trillion yen of net sales as early as fiscal 2006 due to the high material prices but that the achievement might have no sense if the sales could not keep the level after the copper price declined. Mr. Ishihara emphasized the firm should achieve 10% of operating profit ratio or 100 billion yen of operating profit as well as 1 trillion yen of net sales toward fiscal 2009.