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Friday, May 9, 2008

Toshiba announces plan to double profit

Staff writer

Toshiba Corp. said Thursday it plans to double its group operating profit to ¥500 billion in business 2010 from ¥238 billion it booked in business 2007 by expanding its NAND flash memory and nuclear power plant endeavors.

In its three-year business strategy announced Thursday, Japan's biggest chip maker set a target of boosting its consolidated sales to ¥10 trillion in the year ending in March 2011, up 30 percent from ¥7.7 trillion in the year that ended in March.

"If we pursue higher profit without going after greater scale (in sales), we'll hit a brick wall," Toshiba President Atsutoshi Nishida said. "It is impossible to survive (an era of) globalization if we grow at (Japan's slow) GDP growth rate."

Toshiba endured sluggish growth in the decade from business 1995 to 2004, with consolidated sales rising a mere 1.3 percent each year on average. If it achieves the ¥10 trillion sales target, its average sales growth rate in the seven years to business 2010 will reach 9.4 percent.

To achieve that goal, Toshiba plans to increase its overseas business, mainly in the North America, Europe and Asia. According to the midterm business strategy, Toshiba's overseas sales are projected to rise to ¥6 trillion in business 2010, up from ¥4 trillion in business 2007.

"Expanding overseas business is the way to realize profitable and sustainable growth," Nishida said.

Toshiba will increase personnel in its overseas branches by 16,000 in the three years to March 2011. It will also spend ¥30 billion in sales promotion in emerging countries.

In the three years to March 2011, Toshiba will invest ¥2.2 trillion to build new plants, half in its semiconductor division.

In the same period, the electronics giant will also spend ¥1.4 trillion for research and development in electronic devices, digital products and infrastructure, including nuclear and thermal power plants.

Toshiba, which purchased U.S. nuclear reactor builder Westinghouse Electric Co., plans to build 33 nuclear power plants by 2015, mostly in the U.S., and possibly more in China and Britain, Nishida said.

Toshiba was forced to revise its DVD strategy after announcing in February its withdrawal from HD DVD output. Shutting down HD DVD plants and scrapping inventories will cost Toshiba ¥65 billion.

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The Japan Times

Article 5 of 9 in Business news

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