Japanese high-tech glass maker Hoya Corp could spend up to USD 5 billion on acquisitions over the next few years, its chief executive said on 21 May 2008, as it looks to expand its medical equipment b…
Japanese high-tech glass maker Hoya Corp could spend up to USD 5 billion on acquisitions over the next few years, its chief executive said on 21 May 2008, as it looks to expand its medical equipment business. Hiroshi Suzuki also told the Reuters Global Technology, Media and Telecoms Summit that it may need to lay off workers as it finishes restructuring of Pentax, a digital camera and endoscope maker it acquired in 2007. Hoya, which makes glass used in the production of semiconductors and liquid crystal displays, is keen to use its USD 1.5 billion in cash acquiring companies instead of letting it build up on its balance sheet. “If (we) don“t do anything for the next couple of years half of our balance sheet will become cash. That“s not good. I guess we need to do sizeable acquisitions in the next couple of years”, Mr. Suzuki said, adding it could use debt to spend up to USD 5 billion. “Anywhere between USD 1 billion to USD 5 billion”, he said. In April 2008 Hoya posted its first annual fall in operating profit in six years, the fault of falling prices of photomasks used to etch circuitry onto LCD panels and weaker sales of glass used in the production of hard disk drives. Mr. Suzuki said he expects a wave of consolidation to affect both the photomask and hard drive glass markets. Both have about 6 players, and that number needs to be cut, he said. “Even three may actually be too many. The market will not stabilise until you have two, two-and-a half players”, he said. Hoya“s top competitor in hard drive glass substrates is Konica Minolta Holdings Inc. Hoya also makes substrates with the magnetic layer applied, competing with Showa Denko and hard drive makers that do that process in-house. It estimates it controls about 30% of the global market for large LCD photomasks. Its main rivals are Kyoto-based SK-Electronics Co and South Korea“s LG Micron. A reshuffling of the photomask sector could come in many forms, Mr. Suzuki said: “We could be the one to buy somebody. We could be the one to sell our business. We could be the one to merge with someone else. While acquiring Pentax made Hoya one of the top players in the lucrative endoscope market it also burdened it with a struggling digital camera business. Mr. Suzuki estimated that restructuring at Pentax was about 70% finished, and said the remaining 30% would focus on instilling a sense of accountability and other issues related to changing the corporate culture. It may also include job cuts. Hoya does not give full year forecasts until after the 3Q. The consensus of 13 analysts polled by Reuters calls for profit to rise about 14% to JPY 108 billion in the year to March 2009. “It depends on the market situation but things are actually looking better than the last half of last year so I think it“s a feasible number”, Mr. Suzuki said of the consensus forecast.