Japan“s Nippon Electric Glass Co. said 9 December 2008 that its consolidated operating profit for the October-December 2008 quarter was likely to fall 55-65% year-on-year, due to a sharp decline in s…
Japan“s Nippon Electric Glass Co. said 9 December 2008 that its consolidated operating profit for the October-December 2008 quarter was likely to fall 55-65% year-on-year, due to a sharp decline in sales of its glass substrates for LCD panels. This marks a steep downgrade from its previous projection calling for a year-on-year change somewhere between a 5% decline and a 15% rise. The revised range would be equivalent to a profit decline of JPY 8.5 billion (USD 92.3 million) to JPY 11 billion. Sales in the October-December quarter are expected to fall 20-25% to between JPY 70.5 billion and JPY 75.2 billion, instead of a previous projection calling for sales to rise as much as 10%. Sales of glass for LCD substrates had already been declining in the July-September quarter due to production adjustments among Nippon Electric Glass“ customers, but the business environment has deteriorated further in the current quarter. Sales volumes of LCD substrate glass are expected to drop 20% on the year in the October-December quarter. Meanwhile, sales volumes of glass fiber used to reinforce automotive plastics have also weakened due to a slowdown in automobile sales. The company“s sales of glass for electronic parts are also weak. The strong yen has also prompted overseas customers in South Korea and other markets that engage in yen-denominated transactions with Nippon Electric Glass to seek price reductions. As a result, sales prices have fallen more than 10% on the year in the current quarter. Nippon Electric Glass has brought forward its regularly scheduled maintenance of some facilities, thereby resulting in effective production cuts. But current conditions are likely to force the company to make larger reductions in output. The company says it will announce its earnings forecasts for January-March 2009 later in December.