Furukawa Electric Focuses on Offshore Infrastructures for F2010-2012

Furukawa Electric announced its new 3-year management plan “New Frontier 2012” ending in March 2013 on Thursday. This mid-term plan focuses on the sale and profit growth in new markets with new businesses. The main strategy is to expand the sales of the products related to electric power, telecom and railway infrastructures in BRICs and ASEAN countries. At the same time, Furukawa Electric tries to commercialize new environment-friendly businesses related to electric vehicles, smart grids and high-capacity optical telecoms by aggressive investment for R&D. In fiscal 2012 ending in March 2013, Furukawa Electric aims 1 trillion yen of consolidated net sales, 50 billion yen of consolidated operating profit and 5.6% of ROA.

The sales target for fiscal 2012 is higher by 24% than the estimated sales in fiscal 2009 with 3.3 times of operating profit growth. ROA is expected to improve by 3.9 percentage points from 1.7% at the end of March 2010, generated by flat total asset and higher profits.

Furukawa Electric has expanded offshore production capacities of optical fiber cable and ultra-high-voltage power cable along the mid-term strategy to strengthen the products related to offshore infrastructures. In “New Frontier 2012,” the firm newly added high speed railway market. The firm tries to expand the sales utilizing its offshore networks. As a result, Furukawa Electric’s overseas sales rate is expected to reach 35% in fiscal 2012 from 28% in fiscal 2009 and exceed 50% in a long term. Asian countries will account for 25% in the total sales, one third of which will be gained in China, said Mr. Masao Yoshida, Furukawa Electric’s president.

As to new environment-friendly businesses, Mr. Yoshida explained the firm sows the seeds for next-mid-term growth during fiscal 2010-2012. R&D investment is planned at average 21.5 billion yen per year for fiscal 2010-2012, increasing by 20% compared with fiscal 2009. In addition, the firm generates 20 billion yen of strategic fund for fiscal 2010-2012 by self asset sales and profit growth. About 10 billion yen will be invested for R&D and the rest will be utilized to expand offshore businesses.

Meanwhile, Furukawa Electric controls capital expenditure at average 33 billion yen per year for fiscal 2010-2012, lower by 15% than the average in fiscal 2006-2009 of the previous mid term. Capex mainly aims the business expansion of electrolytic copper foil, automotive components and optical fiber, 25% of which will be spent for offshore operations.