Toshiba Dials Down Expectations for Its Fiscal Year Due to Quake

APRIL 20, 2011 THE WALL STREET JOURNAL

By JURO OSAWA
TOKYO—Toshiba Corp. Tuesday raised its net profit forecast for the fiscal year that ended last month to ¥135 billion ($1.64 billion) from the ¥100 billion it predicted in January, citing smaller-than-expected restructuring costs and real estate property sales.

But the Japanese electronics maker lowered its revenue and operating profit forecasts for the just-ended fiscal year due to the March 11 earthquake and subsequent power supply problems, which forced some of its domestic production facilities to temporarily shut down.

Toshiba now expects to post an operating profit of ¥240 billion, compared with its January forecast for ¥250 billion, and also cut its revenue outlook to ¥6.4 trillion from ¥6.6 trillion.
With wide-reaching operations that include consumer electronics, chips and electric power, Toshiba is one of many Japanese companies that have reported damage to their production facilities from the quake.

Of the company's two most seriously affected plants, one in Iwate prefecture that makes microcontrollers and other system chips partially resumed production Monday. The other plant, which produces small liquid crystal display panels, is also running at reduced volume now but is expected to return to full capacity by the end of this month.

A major issue facing many manufacturers is how to secure components and materials for their products.
Analysts say the impact from the earthquake, though limited so far in the just-ended fiscal year, could become more prominent in the fiscal year that began this month.

"Going forward, there are concerns over a possible shortage of materials, which would weigh more on this fiscal year's earnings," said Mizuho Investors Securities analyst Yuichi Ishida. Giving the example of Toshiba's globally competitive flash memory chip business, he said ,continued disruption to wafer supplies could affect production later this year. Wafers are the thin slices of silicon that form the base of semiconductors.

Japanese wafer maker Shin-Etsu Chemical Co. said Tuesday that production remains suspended at its Shirakawa plant in Fukushima prefecture, which alone accounts for 20% of the global supply of silicon chip wafers, according to an estimate by IHS iSuppli. Shin-Etsu said it has been trying to produce more wafers at its other plants in Japan and overseas.

Toshiba said last week that its wafer supplies were secure for the time being.

The company is scheduled to release its earnings for the period on May 9.

In the previous fiscal year through March 2010, Toshiba posted a net loss of ¥19.7 billion, an operating profit of ¥125.2 billion and revenue of ¥6.291 trillion.