Japanese Hoya Corp. said 20 July 2004 that profit for the 1Q of fiscal 2004/2005 rose 45% to a record high on strong sales of lenses and components but the company warned that demand could decline in …
Japanese Hoya Corp. said 20 July 2004 that profit for the 1Q of fiscal 2004/2005 rose 45% to a record high on strong sales of lenses and components but the company warned that demand could decline in the 2H of the business year. Hoya, one of Japan“s most profitable companies and 50% owned by foreign investors, makes glass lenses for digital cameras, mask blanks for the production of chips and photo-masks used to make liquid crystal displays, putting it in a good position to profit from a boom in digital goods. Hoya said group operating profit came to JPY 21.08 billion (USD 194.7 million) in the April to June quarter, compared with JPY 14.54 billion in the year-ago period. Sales rose 17.3% to JPY 74.96 billion. However, the company“s shares have faltered recently, along with other chip and LCD-related shares, reflecting investor worries about a potential fall in demand for semiconductors and possible over-supply in the LCD industry. “We expect to continue on this (strong) path through the 1H of this business year,” Hoya Chief Financial Officer Kenji Ema said at a news conference. “But we may see a correction after that. It could come in the October to December quarter or in the following quarter to March,” he added, noting that after recent editions of the Olympic Games demand for consumer electronics has tended to decline. The next games are due to start in the Greek capital, Athens, on 13 August 2004. Hoya, which competes against South Korea“s LG Micron Ltd. in photo-masks and Japan“s Tamron Co. for camera lenses, forecast operating profit of JPY 42 billion for the 1H to end-September 2004, up 36% year-on-year. It does not issue full-year forecasts until after posting 3Q results. The market consensus is for operating profit to rise 17% to JPY 79.45 billion in 2004/2005, according to a poll of 20 analysts. In addition to strong demand for glass-moulded aspherical lenses, Hoya is also benefitting from higher sales of LCD photo-masks, thanks to rising production of LCD panels for flat-screen TVs. Hoya“s revenues are receiving a further boost in the 2004/2005 from its glass disk operations, which the company strengthened through its acquisition of the glass disk business of Nippon Sheet Glass Co. in 2003. Glass disks are mainly used in PCs, but demand is also being boosted by smaller hard disk drives (HDD) like those in Apple Computer Inc.“s iPod digital music player, and a new source of demand is expected when HDDs are eventually put into mobile phones. Nevertheless, in spite of the company“s solid prospects, the company president still sounded a note of caution about the next business year to March 2006. Responding to a question about whether profits would decline after such a great run, Suzuki said “I feel that we are not in a position to stick our chests out and say that we will produce higher profits and sales again next year,” acknowledging the risk that profits may fall. Hoya“s plants are presently running at full capacity and supply is falling short of demand. It is therefore boosting production capacity for its main products. In July 2004, Hoya said it would build a factory in South Korea to make photomasks for large-sized LCDs. The plant will begin operations in the 2H of 2005, supplying Samsung Electronics and other local LCD firms. “Hoya has high market shares in its main products, meaning that competition is low,” Moriyama said. “And I think it can continue scoring higher profits (next year) considering that it is raising capacity, which will boost revenues.” (USD 1 = JPY 108.24).