Reuters: Technology News: Japan's Hitachi Q1 operating profit beats market consensus

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Japan's Hitachi Q1 operating profit beats market consensus Jul 30th 2012, 06:28 A logo of Hitachi Ltd. is seen at the company headquarters in Tokyo July 25, 2012. Credit: Reuters/Issei Kato TOKYO | Mon Jul 30, 2012 2:28am EDT TOKYO (Reuters) - Hitachi Ltd (6501.T), Japan's largest industrial electronics maker, reported a better-than-expected quarterly operating profit as strong sales in its power and automotive systems business offset the gloom in Europe and the slowdown in China. Hitachi reported an operating profit of 63.6 billion yen ($808.85 million) in the April-to-June quarter, up from 52.4 billion yen in the same period last year when Japanese corporate earnings were battered by the March 11 earthquake and tsunami. The results topped the average forecast of 59.5 billion yen estimated by four analysts polled by Thomson Reuters I/B/E/S. Unlike many of its peers in Japan that have been hit by reduced consumer demand from Europe and China, Hitachi has less exposure to these regions. Analysts say Europe and China will account for only 8 percent and 10 percent respectively of the company's overall sales this business year. Hitachi kept its annual forecast for a 480 billion-yen operating profit for the year ending March, below the average estimate of 500.6 billion yen in a poll of 22 analysts surveyed by Thomson Reuters I/B/E/S. The sprawling conglomerate, whose products range from excavators to thermal power plants, has also scaled back its unprofitable consumer electronics division and shifted its focus towards growth areas such as infrastructure, including rail systems and urban planning. The company plans to stop producing its own TV sets later this year after merging its loss-making small-panel display operations with those of Sony Corp (6758.T) and Toshiba Corp (6502.T) last year. Hitachi said last week that it won a 4.5 billion-pound ($7-billion) contract to build intercity trains in Britain, despite the debt crisis in Europe. The company has also invested in new segments such as cloud computing and social infrastructure systems. Still, Hitachi's operating margin was just above 4 percent in the previous year, lagging behind global counterparts such as General Electric Co (GE.N) and Siemens AG (SIEGn.DE) whose margins were around 14 and 10 percent respectively, Thomson Reuters data shows. Hitachi has vowed to more than double its margins through aggressive cost-cutting in all of its 900 subsidiaries and moving its focus to high-profit global infrastructure orders. The company logged a record net profit of 347.2 billion yen in the previous year, boosted by the sale of its hard drive business to Western Digital Corp. Hitachi's main domestic rivals Toshiba and Mitsubishi Electric (6503.T) are due to announce their quarterly earnings on Tuesday. Panasonic Corp (6752.T) also reports on the same day. Shares of Hitachi, partly owned by foreign funds, ended up 0.4 percent at 456 yen before its results. Tokyo's benchmark Nikkei .N225 traded 0.8 percent higher. ($1 = 78.6300 Japanese yen) (Reporting by Mari Saito; Editing by Ryan Woo) Link this Share this Digg this Email Reprints

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