Fuji Photo Says Reorganization Will Impede Growth (Update1)
April 27 (Bloomberg) -- Fuji Photo Film Co., the world's biggest maker of film used in flat-panel displays, said costs to cut jobs and shrink its photographic film operations will keep profit from growing until next year.
Fuji Photo today forecast net income of 38 billion yen ($331 million) for the fiscal year that began on April 1, little changed from profit of 37 billion yen in the year just ended. The company expects 79 billion yen in restructuring costs this year, similar to 86 billion yen last year.
Tokyo-based Fuji Photo is cutting 5,000 jobs and eliminating production lines in its photography unit as rising sales of digital cameras erodes demand for traditional film. The company is expanding into pharmaceuticals, printer ink and chemicals for new revenue. Eastman Kodak Co., the world's largest photography company, is also closing plants and plans to cut 25,000 jobs.
Fuji Photo said it will on Oct. 1 reorganize under a holding company called Fujifilm Holding Corp. The change will encompass Fuji Xerox Co., its venture with Xerox Corp., and eliminate the word ``Photo'' from its name.
In the quarter ended March 31, the company had a net loss of 23.2 billion yen after costs to reorganize, compared with a profit of 11 billion yen a year earlier. Sales gained 7.5 percent to 682 billion yen in the three-month period.
More R&D
``We aim to raise spending on research and development by a figure of between 5 percent and 10 percent this year from about 200 billion yen in 2005,'' Chief Executive Officer Shigetaka Komori said during a press conference in Tokyo today. ``We also aim to raise capital spending by about 10 percent,'' which was also about 200 billion yen last year.
With restructuring and growth in new segments, such as flat- panel display film, earnings will probably recover in the year starting April 1, 2007, Komori said. The company will strengthen acquisition efforts this year, and Komori said he wants to diversify into new technologies and markets.
The company's annual spending on mergers and acquisition is about 100 billion yen. Recent purchases include a stake in Perseus Proteomics Inc., a developer of antibody-based therapeutics and diagnostics; a unit of Avecia Group, the world's biggest supplier of dye and inks used in inkjet printers; and part of Arch Chemicals Inc.'s Planar Solutions LLC, a microelectronics materials maker.
Digital Cameras
The company expects to have a profit from its digital camera operations this year, with shipments rising to more than 7 million units from 6.2 million in 2005. Fuji Photo makes FinePix digital cameras.
Still, the company's imaging solutions division, which includes color film along with digital cameras, will probably have a loss this year, Komori said. It had an operating loss of 75.7 billion yen in the year just ended.
Fuji Photo shares were unchanged at 3,960 yen today. It reported earnings after the close of trading. The stock has risen 13 percent in the last 12 months.
To contact the reporter for this story:
Aiko Wakao in Tokyo at
awakao@bloomberg.net.
Last Updated: April 27, 2006 05:13 EDT
