Two leading Japanese flat-glass makers, Asahi Glass Co. and Nippon Sheet Glass Co. Ltd. cut their profit estimates in the last week of August, becoming the latest victims of the slowdown in the global…
Two leading Japanese flat-glass makers, Asahi Glass Co. and Nippon Sheet Glass Co. Ltd. cut their profit estimates in the last week of August, becoming the latest victims of the slowdown in the global high-tech industry. Asahi Glass said it had lowered its group net profit estimate for the year ending March 2002 by 30.6% to JPY 25 billion (US$ 208.6 million), while Nippon Sheet cut its profit estimate by a steep 64.7% to JPY 6 billion. In the previous year, Asahi scored a profit of JPY 24.7 billion and Nippon Sheet Glass generated a JPY 31.5 billion profit. Asahi Glass said the high-tech industry slowdown was hitting its earnings, especially its mainstay computer display-related business such as cathode-ray-tube (CRT) glass and liquid-crystal-display (LCD) glass substrates. Analysts have warned that Nippon Sheet“s dominant market share of more than 95% in the global market for such micro lenses made the firm“s earnings vulnerable to stalled capital spending in the US telecoms industry. Their warnings are the latest evidence of the earnings downturn in Japan“s mighty high-tech sector. Prior to their announcements, shares in Asahi Glass ended the Friday session down 1.31% at JPY 755, while Nippon Sheet slipped 2.25% to JPY 609. Shares in Asahi Glass have lost 20% in value so far this year, while Nippon Sheet has lost 56%, compared to a nearly 20% fall in the technology-heavy Nikkei 225 share average . The two flat-glass makers were also hit by slowing demand for wavelength division multiplexing (WDM) technology, which transmits data over a fibre cable. In a separate move, Asahi also announced that it planned to sell a 20% stake in Hankuk Electric Glass Co. Ltd. to LG Electronics, Inc., both of South Korea, for KRW 92.43 billion (US$ 72.55 million). The deal would cut Asahi“s stake in the Korean glass bulb maker to 30%, but LG plans to bolster its ties with Asahi in a bid to secure advanced glass products.