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Seiko Epson Slides to FY05 Net Loss on Falling Device Prices; Restructuring4/25/2006
TOKYO - Seiko Epson Corp slipped to a loss in the year to March 2006 (FY05), hit by falling prices of electronics devices and ink-jet printers.
The firm also took special restructuring charges in response to the challenging business climate facing it.
For the year Seiko Epson posted a net loss of 17.9 bln yen, reversing a year earlier profit of 55.7 bln yen.
It spent 45.5 bln yen in order to accelerate structural reforms.
As part of the restructuring program, the firm plans to eliminate the jobs of 3,000 contract workers as well as 100 full-time staff in Europe.
Sales last year grew 4.7 pct to 1.55 trln yen thanks mainly to an increase in the number of printers sold.
But the modest sales growth was not enough to offset the negative impact on profitability from a fall in prices of LCDs and printers. As a result operating income tumbled nearly 72 pct to 25.7 bln yen.
The firm also attributed the drop in profit margin to falling demand for rear projection TVs in which LCDs are used, along with rising competition in the printer market.
The company noted that the fall in demand for rear projection TVs was especially marked in the US where demand for plasma TVs and LCD TVs has risen sharply as prices have declined.
For the year to March 2007, Seiko Epson forecast a net income to 14 bln yen and operating profit of 40 bln yen, though revenue is seen remaining virtually flat at 1.555 trln yen.