Sumitomo Electric on Track for F2012 Target, Mr. Matsumoto

Sumitomo Electric Industries’ president Masayoshi Matsumoto said to a reporter of Japan Metal Bulletin the firm is on track for targeted 210 billion yen of consolidated operating profit for fiscal 2012 ending March 2013 when the firm could secure 80 billion yen of profit for second half of fiscal 2011. He indicated the sales could be several hundred billion yen behind the targeted 3 trillion yen of sales under the 5-year plan, 12Vision through fiscal 2012 but he emphasized the firm focuses on the current business domain without unnecessary M&A and expansion.

The firm plans 100 billion yen of consolidated operating profit with 2 trillion yen of sales for fiscal 2011. The firm targets 20 billion yen of operating profit with 900 billion yen of sales in April-September while the firm posted 2.4 billion yen of operating profit with 441.6 billion yen of sales in April-June due to severe automobile business after the major earthquake. However, Mr. Matsumoto said the results in July-September could be better than expected thanks to better automotive demand.

The firm operates at full capacity both for sinter parts and cemented carbide of industrial materials unit along with automobile unit mainly for wire harness. The firm also operates at full capacity for glass material of optical fiber both at domestic and Chinese plants as a part of information & communication unit.

Mr. Matsumoto said sales would decrease from export and offshore subsidiaries under higher yen rate while the firm would secure cash flow under the current rate. He expects the targeted 3 trillion yen of sales in fiscal 2012 could be realized under 120 yen per US dollar of rate as the plan was launched.

The firm has improved the profitability by lowering breakeven point through cost cutting effort in order to realize 210 billion yen of operating profit in fiscal 2012. Mr. Matsumoto said the firm has to make additional actions to realize 3 trillion yen from now and the firm has options for that. However, he said the firm focuses on investment efficiency and doesn’t insist on the target.