Damage From Strong Yen Continues : Japan: Country’s largest consumer electronics maker sees drop in profit and top computer maker cuts research spending.
Japan’s largest consumer electronics maker said Tuesday that it will not make as much money as expected, and the country’s top computer maker cut research spending--further signs of economic damage from the strong yen.
Matsushita Electric Industrial Co. joined a growing list of Japanese companies that have lowered their profit outlooks because of sagging demand and the yen’s rapid rise.
Matsushita, which sells the Panasonic, Technics and Quasar brands, said sales of its audiovisual products are particularly slow.
To save money, computer maker Fujitsu Ltd. said, it has decided to cut its research and development budget this fiscal year by a total of $381.3 million from last year’s $3.051 billion.
Meanwhile, the nation’s six largest steel companies are considering giving employees time off with pay to slow production while exports and sales to auto makers are slumping, an industry official said.
A Kawasaki Steel Corp. spokesman said the companies still had not decided how long the absences would be. Kyodo News Service said employees would be ordered to stay home about two days a month starting in January.
The high yen has hurt manufacturers by making Japanese goods more expensive overseas and reducing the value of profits that exporters bring back to Japan when they change their revenue into yen.
In response, manufacturers are moving more production overseas to countries where costs are lower.
Electronics maker NEC Corp. announced Tuesday that it will shift production of laptop computers to its U.S. factory in Seattle, and Honda Motor Co. said last week that it will make all of its cars for the North American market in North America in three years.
Matsushita said it now expects its group net income to grow 4% this fiscal year, which ends March 31, rather than the 46% it had predicted earlier.
Yuji Hijikata, Matsushita’s corporate planning director, said sales in overseas markets are healthier than in Japan but that the gains are likely to be wiped out when repatriated to Japan because of the high yen.
Japan’s economy shrank by an annual rate of 2% in the April-June quarter, largely because of the high yen and weak consumer and corporate spending. In addition, many of Japan’s traditional exports, such as cars and electronics, now face markets that are nearly saturated in North America and Europe.
The dollar has dropped about 20 yen, or 16%, since January.
In other bad news for the economy, retail sales fell 4.2% in August from a year earlier for the 15th straight monthly drop, Japan’s trade ministry reported Tuesday.
And exports of motor vehicles plunged 15% during the month from the year-earlier level to 356,499, the Japan Automobile Manufacturers Assn. said.
Fujitsu said the decision to further cut research spending resulted from the yen’s unexpectedly strong rise. Among the areas hit hardest by the reduction will be semiconductors and large computers, it said.
However, spending on promising new technology such as fiber-optic communications and multimedia will increase, it said.
Last year, Fujitsu registered its first pretax loss since going public in 1949. It announced an emergency cost-cutting plan in March and plans to trim its labor force by 11% to 50,000 by mid-1995.