Hitachi posts loss, sees recovery on cost cuts

Tokyo, May 16: Hitachi Ltd. posted a large loss on Wednesday on its struggling hard drive and thermal power plant units, but the deficit was smaller than expected and it forecast a return to profit this year as it cuts costs.

The announcement sent Hitachi shares up 2.2 percent to 898 yen at 0510 GMT. The benchmark Nikkei average was up 0.2 percent.

Hitachi, which makes products ranging from nuclear turbines to washing machines, has been fighting price falls in its core hard drive and flat-TV operations and has repeatedly promised to trim loss-making businesses.

Japan's biggest industrial electronics company said it expects to post a net profit of 40 billion yen (3 million) in the business year to next March, roughly in line with a consensus forecast of 39.01 billion yen from 14 analysts polled by Reuters Estimates.

For the business year that ended of March 31, Hitachi posted a net loss of 32.8 billion yen, compared with a profit of 37.32 billion yen a year earlier. The loss for 2006/07 was about half the consensus by 14 analysts of 61.91 billion yen.

Hitachi was hurt by cost overruns to build a coal-fired thermal power plant for MidAmerican Energy Co. in Iowa.

It also shouldered repair and replacement costs at utilities Chubu Electric Power Co. Inc. and Hokuriku Electric Power Co.

Inc. after problems with Hitachi-made turbines last year halted two nuclear units.

The company, which has over 130 subsidiaries of which 14 are listed, said in March it would sell its stake in Japan Servo Co.

to precision motor maker Nidec Corp., fuelling speculation among investors that it might do the same with other struggling units.

Hitachi boasts a handful of strong units, including Hitachi Construction Machinery Co. Ltd., Hitachi Metals Ltd., Hitachi Transport System Ltd. and Hitachi Cable Ltd.Their earnings have been lifted by spending worldwide on factories and public works projects.

Hitachi shares rose 23.2 percent to 914 yen in the January-March period, while closest rival Toshiba Corp. rose 1.5 percent.

Reuters>