Products for electronics and high-quality optics are transforming the earnings structure of Japanese glass companies and leading to an overall positive outlook for the industry, Moody“s Investors S…
Products for electronics and high-quality optics are transforming the earnings structure of Japanese glass companies and leading to an overall positive outlook for the industry, Moody“s Investors Service says in a new report. Moody“s says a company“s future credit quality will largely depend on the success it has in deriving and maintaining profits in these less traditional businesses, which will require substantial investment. The emerging businesses include glass products for displays, such as glass substrates for LCDs and PDPs, glass magnetic disks for servers and hard drives, and opto-electronics materials. Moody“s says potential growth for all these products is strong over the medium term. In addition, Moody“s believes that global demand for CRT glass bulbs will grow stably. Realizing the full potential of these markets, however, will be challenging, according to Moody“s. “These new businesses involve constant innovation using new technology and the delivery of new products to the user base,” says Moody“s analyst Emiko Otsuki. “At the same time, they require companies to estimate their users“ potential needs and to constantly invest in R&D for better quality products and for renovating the manufacturing process.” Moody“s reports that after faltering in 1998, earnings in the industry are already showing a strong recovery due to this shift in earnings structure. The industry takes higher-than-expected-earnings in the current fiscal year and are investing them in these businesses, according to Moody“s.