Sanyo narrows loss in latest quarter, but still faces falling sales

TOKYO (AP) - Troubled Japanese electronics maker Sanyo Electric Co. (NASDAQ:SANYY) said Thursday it narrowed its loss in the most recent quarter but still reported a drop in sales as it strives to overcome intensifying competition from Asian rivals.
Sanyo had a net loss of 9.668 billion yen ($83.3 million US) in the April-June quarter, the company's first fiscal quarter, compared with a loss of 26.21 billion yen a year earlier, the company said in a release.

Sales slid to 504.1 billion yen ($4.35 billion) during the period from 569 billion yen the same period last year.

Sanyo has been battling falling prices for consumer electronics amid an influx of cheaper products from other manufacturers in Asia. An earthquake also damaged a chip-making plant in 2004, forcing the company to reverse its profit forecast to a loss that year.

Since then, Sanyo has undergone extensive restructuring, including job cuts, reducing factory space and dropping some businesses.

In January, it got a much-needed capital boost from a group of investors led by Goldman Sachs Group Inc., which became the company's top shareholders and took over the nine-member board.

In the most recent quarter, Sanyo's consumer electronics division, which accounts for nearly half the company's total revenue, weathered a 13 per cent drop in sales to 237.2 billion yen ($2.04 billion).

Sliding sales of digital cameras and declining overseas demand for mobile phones overwhelmed an increase in washing machines, the company said.

Foreshadowing the decline in mobile phones, Sanyo and Nokia Corp. of Finland said last month they had scrapped plans for a mobile joint venture, just four months after trumpeting the deal as a step in growing globally in sharpening their competitiveness.

As part of a revival plan introduced in November last year, Sanyo spun off its semiconductor business on July 1. Sales at Sanyo's component unit, which makes photovoltaic cells and other electronic components, fell 8.6 per cent in the first quarter.

Sanyo kept unchanged its forecast to return to the black in the current fiscal year ending March 2007, with net income at 20 billion yen ($172 million) on sales of 2.4 trillion yen ($20.7 billion). The company still expects a first-half loss of 8 billion yen ($69 million).

Its losses for the year through last March totaled 205.7 billion yen, larger than the 171.5 billion yen loss the previous year.

Sanyo shares, which have declined by nearly a third this year, ended unchanged at 219 yen ($1.88) Thursday on the Tokyo Stock Exchange. The company released results after the market closed.

© The Canadian Press, 2006