Hitachi Cable News vol.373
73rd cumulative second quarter business report
From April 1 to September 30, 2009

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Special Report

Summary of business performance for the cumulative second quarter of fiscal 2010

Measures and results in the cumulative second quarter of this consolidated fiscal year

In the cumulative second quarter of this consolidated fiscal year, the Hitachi Cable Group implemented comprehensive cost reductions targeting fixed costs as part of urgent measures to improve business performance. As structural business improvements, the Group has largely completed consolidating its production bases for chip-on-film (COF) products for liquid crystal display devices. In addition, the Group is ahead of schedule in efforts to consolidate its North American auto-parts production bases. To streamline its electronic wires business, the Group has also sold all shares of stock in a subsidiary based in the Huanan area of China.

Overview of business performance

Despite nascent recovery in products for semiconductor and automotive markets, sales during the cumulative second quarter of this consolidated fiscal year fell 39% from the same period in the previous fiscal year to 170,284 million yen, due to lower sales of products attributable to lower domestic private-sector capital investment and lower copper prices, a primary raw material for wires, cables, and copper products. Lower sales and other factors led to lower income figures compared to the same period of the previous fiscal year, with operating losses of 5,321 million yen, ordinary losses of 3,784 million yen, and net losses of 4,850 million yen.

Note: The above amounts have been rounded off to the nearest 100 million yen.

A segment-by-segment look at business conditions follows.

In the wires and cables business, declining construction demand led to lower sales in industrial cables and electric power cables. Sales of magnet wires were slow, with the exception of products for hybrid vehicles. Despite signs of recovery in electronic wires and wiring devices for certain products used in consumer electronics, demand remained sluggish in the primary markets of products for industrial equipment and machine tools. Overall sales in this segment fell by 43% from the same period of the previous fiscal year to 81,601 million yen. Operating losses in this segment totaled 1,620 million yen.

In the information and telecommunications networking business, sales of optical submarine cables remained strong. While wireless sales for the construction sector fell, sales were strong for products for mobile-phone base stations. In the information networks business, performance was strong for systems integration services but sluggish for information network devices. Overall sales in this segment fell to 32,431 million yen, down 22% from the same period of the previous fiscal year, while operating income fell 79% to 576 million yen.

In the area of sophisticated materials business, sales recovered for the compound semiconductors used in electrical devices but fell significantly for optical devices. While the introduction of new TAB tape products for semiconductor memory use went as planned and the recovery in demand for chip-on-film (COF) products for use in liquid crystal display panels exceeded expectations at the start of the fiscal year, sales of TAB tape failed to reach levels achieved during the same period of the previous fiscal year. Auto-parts performance remained sluggish, chiefly at North American subsidiaries. In the area of copper products, while demand recovered for copper strips for use in semiconductors, sales of both copper tubes and copper products for electrical use fell, weighed down by factors including slowing capital-investment demand. In this segment, overall sales fell to 61,790 million yen, down 43% from the same period of the previous fiscal year. Operating losses in this segment totaled 4,546 million yen.

Note: The sales figures by business segment in the text include internal sales or transfers between business segments.

Note: Graphs of sales by business segment are based on figures after removing internal sales and transfers between business segments.

Note: Under the Financial Instruments and Exchange Law, Hitachi Cable has adopted a system of reporting results on a quarterly basis. As a result, the period traditionally known as the "interim fiscal period" is now known as the "cumulative second quarter."