Japan“s Asahi Glass Co., Ltd. has decided to gradually stop operations of some production furnaces at overseas CRT glass production bases by the end of September 2006. The decision is in line with th…
Japan“s Asahi Glass Co., Ltd. has decided to gradually stop operations of some production furnaces at overseas CRT glass production bases by the end of September 2006. The decision is in line with the company“s policy of restructuring the production system of the CRT glass business to improve its profitability as part of an important measure for “JIKKO-2007,” the three-year medium-term management plan begun in 2005. The firm projects demand for CRT glass used in personal computers and televisions will decline to about 200 million units for the fiscal year ending December 2006, from around 264 million units in fiscal 2004, due to a rapid shift in demand towards TFT LCDs. From fiscal 2005, profitability of the company“s CRT business sharply deteriorated, hurt by a fall in sales volume, a drop in sales prices and a rapid rise in the costs of raw materials and fuel. Because of the decline in demand for CRT glass, the company has carried out various measures including the withdrawal from CRT glass production in the US and Japan, but also decided to restructure its production system because the decline is expected to continue in the future. Under the restructuring plan, the company will reduce its CRT glass production capacity by about 35% by stopping all operations in Indonesia (P.T. Video Display Glass Indonesia, one funnel production furnace) and Taiwan (Pacific Glass Corp., one panel production furnace), and also by stopping a total of four furnaces at other production bases. The company will continue panel and funnel production in Singapore, Thailand, China and South Korea for its CRT glass business and will take all necessary steps, including the future restructuring of the production system. Through the reduction of production capacity, the company expects to incur an extraordinary loss of an estimated JPY 10 billion for the 2Q of fiscal 2006.