Sanyo results hint at financial recovery

Battered but unbowed by scandal

Scandal-hit electronics firm Sanyo showed signs it may be on the road to recovery despite posting net losses of ¥45bn (€275m) in its annual results.

The results, for the year ending 31 March 2007, showed the Osaka-based firm had sales of ¥2,215bn (€13.5bn), down 7.6 per cent from the previous year. Sanyo saw its operating profit rise to ¥49.5bn (€302m) from an operating loss of ¥17.2bn (€105m) a year earlier.

There was more positive news for investors as the firm forecast a return to profitability in the current financial year. Sales of ¥2,230bn (€13.6bn) are predicted for the year ending 31 March 2008, along with a net profit of ¥20bn (€122m). Operating profit, though, is expected to drop ¥45bn (€275m).

News of the results saw shares in Sanyo jump 3.2 per cent to ¥193 (€1.18). The figures were released just before the market closed.

The projected return to profitability is a welcome relief for investors in Sanyo which admitted recently to falsifying its results in 2003, having reported a profit when there was a possibility the Japanese firm had recorded a loss.

The scandal resulted in the appointment of a new president. Last month Seiichiro Sano became the first person from outside the founding Iue family to lead the firm as president or chairman of Sanyo since it was established in 1947. He replaced Toshimasa Iue, who stepped down in March, apologising for having failed to achieve reforms and change.

The accounting scandal surfaced as the electronics maker was undergoing an upheaval, reducing jobs and moving away from unprofitable interests under a revival plan. Sanyo sold its entire 17 per cent stake in Sanyo Electric Credit this month to General Electric for ¥21.6bn (€132m). The company is also selling its chip-making unit, Sanyo Semiconductor.

Sanyo received a capital boost last year from a group of investors led by Goldman Sachs, which became the company's top shareholders and took over the board, putting new management in place. On Monday one of these new appointees, Kentaro Yamagishi, was promoted to executive director and executive vice president, having previously served as deputy general manager with the firm.

Copyright © 2007, ENN