TOKYO, Jan 30 -- Japan's Hitachi Ltd warned of a record $7.8 billion annual loss due to weak sales, a firmer yen and costs to restructure its sprawling operations, joining a growing list of technology companies affected by the deepening recession.
That loss would be the biggest ever by a Japanese manufacturing company.
Hitachi, Japan's largest electronics maker with products ranging from rice cookers to nuclear reactors, said it would exit unprofitable businesses, close plants and take other restructuring steps in a bid to cut 200 billion yen in fixed costs by March 2010.
"Since last November, economic conditions surrounding our company have kept deteriorating at an unprecedented speed," Hitachi Chief Executive Kazuo Furukawa told a news conference.
The company now expects a net loss of 700 billion yen ($7.8 billion) for the year to Mar. 31, instead of a previously projected 15 billion yen profit, following Sony Corp and Toshiba Corp in announcing heavy losses.
The latest forecast compares with the consensus of a 54.8 billion yen loss in a poll of 12 analysts by Reuters Estimates.
Hitachi's automotive components business was battered by slumping car sales worldwide, while its flat-screen TV operations suffered from steep price falls amid fierce competition and anaemic demand.
Hitachi cut its operating profit forecast by 90 percent to 40 billion yen, reflecting a downturn across most of its major business lines including construction equipment unit Hitachi Construction Machinery Co.
The electronics conglomerate said it was also forced to write down deferred tax assets following a dramatic fall in taxable income across the group. It estimated that adjustment would boost its taxes by about 140 billion yen.
Hitachi's performance was also weighed down by struggling microchip joint venture, Renesas Technology.
Renesas, owned 55 percent by Hitachi and the remainder by Mitsubishi Electric, expects to post a net loss of 206 billion yen for the year to March as demand for chip-intensive products such as automobiles and mobile phones wilts.
"Renesas is in a tough situation. We are in talks with Mitsubishi Electric on possible aid for Renesas including financial support," Furukawa said on Friday.
Although Renesas' turnaround will be led by Hitachi and Mitsubishi, its alliance with other Japanese semiconductor makers is also a future option, Furukawa added, raising a possibility of far-reaching realignment in the nation's semiconductor sector.
Toshiba Corp is already in talks to merge part of its chip operations with NEC Corp's semiconductor unit as a sharp global slowdown forces Japanese chip makers to cut jobs and try to band together.
Hitachi, with group employees of about 400,000, said it plans to cut workers as part of its restructuring measures, but did not specify the size of the job cut.
NEC plans to cut 20,000 jobs across the group -- the biggest cuts announced by an Asian company so far in the global crisis.
Shares in Hitachi closed down 6.7 percent at 294 yen before the announcement, while the benchmark Nikkei average lost 3.1 percent. (Editing by Michael Watson and Andrew Macdonald)
By: Kiyoshi Takenaka and Nathan Layne
Copyright 2009 Reuters.