Japanese Stocks Earnings Roundup for Monday

by: Steven Towns

Monday was actually another busy day for Japanese companies reporting earnings. The earnings trend continues to be positive with most firms reporting y-o-y growth and some raising guidance. Notably Mitsubishi UFJ's (NYSE:MTU) net income came in lower y-o-y but I don't see any reason to be overly concerned. See below for a recap of companies that released earnings today including: Elpida, Hitachi (HIT), Japan Tobacco, Makita (NASDAQ:MKTAY), Toshiba (OTCPK:TOSBF), and Wacoal (NASDAQ:WACLY).

Elpida Memory (Tokyo: 6665) -- The world's 5th largest DRAM manufacturer posted a record quarterly profit on brisk demand for its DRAM chips and was helped by stable prices and increased capacity. Reuters.com reports that Elpida hinted at more growth this quarter. Operating profit for the quarter ended June 30th totaled 9.14 billion yen ($79.81 million) against a 2.6 billion yen loss in the same period last year. This beat four analysts polled by Reuters who forecast 7.64 billion yen.

Elpida Chief Financial Officer Takehiro Fukuda told the press:

"Our business went very well in the mobile phone DRAM market, where we have competitive strength. Server chips met strong demand, and prices for large-lot buyers were relatively stable."

Net profit came in at 6.6 billion yen ($57.2m) versus a loss of 3.3 billion yen last year. Sales surged 91.7 percent to a record 92.1 billion yen ($798m).

Elpida doesn't provide earnings forecasts but its CEO Yukio Sakamoto said he aims to hit the 100 billion yen (~$866m) mark in sales in the July-September quarter.

"I'm a bit concerned about excessive mobile phone inventory. But most excess inventory exists in the low-end mobile phone market and not in the high-end market, to which we mainly supply our products." (Sakamoto, Elpda CEO)

14 analysts polled by Reuters Estimates expect Elpida on average to have a full-year operating profit of 35.42 billion yen ($307m), up sharply from a 144 million yen ($1.25m) profit a year earlier.

See Reuters.com mention of lawsuits against Elpida in its article covering the firm's earnings.

(Click here to access Elpida's IR website.)

Elpida Memory Inc (Tokyo: 6665) 1-year chart:

Hitachi Ltd (HIT) (Tokyo: 6501) -- Reported better-than-expected quarterly profits based on better sales of small and medium-sized displays and had a smaller loss on hard disk drives. It is maintaining its full-year forecast for a double-digit gain in operating profit at a projected 290 billion yen ($2.5b). For the quarter ended June 30th, Hitachi's operating profit was 17.14 billion yen ($149.7 million), up from 1.29 billion yen a year earlier. This blew away four analysts polled by Reuters who estimated a consensus 5.4 billion yen ($47m) profit. Sales on the quarter increased 9.7% to 2.25 trillion yen ($19.5b). Reuters.com reports that "Hitachi is still struggling to turn around three loss-making businesses -- its display, flat-panel TV and hard disk drive operations -- and it said on Monday that it could not promise its flat TV unit would turn profitable in the second half." (Click here to access Hitachi's IR website.)

Hitachi Ltd (HIT) 1-year chart:

Japan Tobacco (Tokyo: 2914) -- Benefited from a rush in domestic cigarette buying ahead of a mandated tax hike and its own price hike. Q1 operating profit was up 19.3% y-o-y at 102.07 billion yen ($890.7 million). Net income surged 60% to 76.25 billion yen ($661m) on sales of 1.29 trillion yen ($11.2b), a 12% y-o-y increase. JT is maintaining its original full-year guidance. Investors were encouraged by JT's announcement to cut its 115 domestically offered products down to 80 in order to improve marketing. JT is the third largest tobacco company in the world and half-owned by the Japanese government. (Click here to access JT's IR website.)

Japan Tobacco Inc (Tokyo: 2914) 1-year chart:

Makita Corp (MKTAY) (Tokyo: 6586) -- Reported a 23.4% increase in sales to 62 billion yen ($537m) but reported decreases in profitability due to a one-off gain in the year prior. Operating income fell 33.9% y-o-y to 10.5 billion yen ($91m) and net income fell 49.9% to 7.82 billion yen ($68m). Makita revised upward its sales forecast for the 6-month period ending in September and for the full-year period ending in March. For more details see Makita's consolidated financial results report by clicking here (.pdf).

Makita Corp (MKTAY) 1-year chart:

Toshiba Corp (OTCPK:TOSBF) (Tokyo: 6502) -- Reported better-than-expected quarterly profits based on strong sales of flash memory chips, of which it is the second largest manufacturer in the world behind Samsung. It maintained its full-year financial forecast, projecting a double-digit gain in operating profit. For the quarter ended June 30th, operating profit was 20.84 billion yen ($182m) versus a 1.85 billion yen loss a year earlier. Reuters.com reports that Toshiba's results "beat a consensus estimate for a 13.9 billion yen ($120m) profit by five analysts polled by Reuters and a prediction last week by the Nihon Keizai newspaper of 19-20 billion yen." The same article cites Marc Desmidt, head of the Japanese large-cap equity team at Merrill Lynch Investment Managers, who said he is concerned about price competition in NAND-flash memory as well as Toshiba's acquisition of power plant firm Westinghouse. A slow-down Apple's (NASDAQ:AAPL) sales of iPods would obviously not be good. Meanwhile, Toshiba is teaming up with SanDisk (SNDK) to boost capacity. Toshiba maintained its full-year forecast for operating profit to rise 10% to 265 billion yen ($2.3b), which is in line with the market consensus. (Click here to access Toshiba's IR website.)

Toshiba Corp (OTCPK:TOSBF) 1-year chart:

Wacoal Holdings (WACLY) -- Reported a 25.7% increase y-o-y in Q1 income before income taxes at 4.26 billion yen ($37m). Net income rose 16.3% to 2.77 billion yen ($24m) on sales of 39.58 billion yen ($343m), which was 0.9% lower than last year. Wacoal raised its full-year guidance for net income by 500 million yen ($4.3m) to now total 8.5 billion yen ($73.6m). In case you didn't know, Wacoal is a leading manufacturer of women's lingerie. (Click here to access Wacoal's IR website.)

* Chart currently unavailable for WACLY *


Toshiba and Hitachi beat consensus with Q1 results (Reuters)

Elpida swings to record quarterly profit (Reuters)

JT posts 19 pct rise in Q1 profit, keeps forecast (Reuters)

Yahoo! Japan Finance News

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