Japan's ailing Sanyo Electric Co. has torn up its forecast for a return to the black this year as it axed 2,200 more jobs and flagged a possible sale of its cellphone business amid fierce competition.
Sanyo predicted net losses of 50 billion yen (430 million dollars) for the fiscal year to March 2007, reversing its July forecast for a net profit of 20 billion yen and after the previous year's 205.7-billion-yen loss.
Prices of products such as mobile telephones and digital cameras declined in the face of a growing price war, the company said Friday.
"Because of falling income in the cellphone and digital camera businesses, total sales and operating income are going to fall short of expectations," Sanyo president Toshimasa Iue told reporters.
The profit warning overshadowed a better interim performance. Sanyo reported reduced net losses of 3.62 billion yen for the six months to September, down from 142.53 billion yen a year earlier.
The group made an operating profit of 15.84 billion yen in the period against a year earlier loss of 28.37 billion yen while revenues fell 7.1 percent to 1.096 trillion yen.
"Since the beginning of the fiscal year the company has actually seen better performances in the businesses which it said it would strengthen," said Iue.
"There seems to be a view that the company's domestic sales will shrink but that won't be the case."
The company has been accelerating its restructuring and said in May it had managed to complete planned 14,000 job cuts two years ahead of schedule as part of efforts to revive its flagging fortunes.
The group's main semiconductor plant was seriously damaged in Japan's worst earthquake in a decade in October 2004 and the company has struggled to win over consumers faced with a vast array of hi-tech new products on the shelves.
Sanyo said Friday that it would cut 2,200 more jobs in the year to March 2007 -- 1,500 in Japan -- and incur restructuring costs of 40 billion yen.
The group aims to reduce its number of global affiliates by about one third from around 300 at present over the next three years and indicated that its cellphone and semiconductor operations could face the chop.
"We will take any measures possible in the cellphone and digital camera business," executive vice president Koichi Maeda said.
Earlier a business daily reported that Sanyo would end domestic cell phone production at its Daito plant in Osaka Prefecture, spin off the operations next fiscal year and sell the bulk of the new company's shares to a competitor.
Sanyo also intends to sell off the rest of its semiconductor business, which was spun off in July, and transfer digital camera production to Vietnam, Indonesia and China, the Nihon Keizai said in an unsourced report.
Maeda said the second half of the fiscal year would be crucial if the group is to meet its targets but added that the projections were by no means impossible. "Rather I see them as conservative."
Sanyo's troubles contrast sharply with profit gains at rivals such as Sharp and Panasonic brand-maker Matsushita Electric Industrial who are riding high on booming sales of flat-panel TVs.
The electronics maker, which began in 1947 making bicycle lamps in Osaka, brought in Tomoyo Nonaka, a former television anchorwoman with no experience in corporate management or electronics, to become its new chairwoman and chief executive officer last year.
Sanyo Electric shares closed down three yen or 1.6 percent to 180 ahead of the results while the benchmark Nikkei index dropped 1.13 percent.
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