In the Information & Telecommunication Systems segment, earnings are projected to fall far below initial forecasts despite a strong performance in the storage solutions business. This deterioration mainly reflects worsening profitability in the HDD business due to a large drop in prices in the wake of intensifying price-based competition. In the Electronic Devices segment, the LCD business is on track to meeting initial forecasts for achieving profitable operations. In the Power & Industrial Systems segment, despite healthy results at Hitachi Construction Machinery Co., Ltd., Hitachi will book a lump-sum charge to cover the repair costs for turbine damage at nuclear power plants and cost overruns at an overseas thermal power plant project. This charge will result in much lower segment operating income than initial forecasts. In the Digital Media & Consumer Products segment, flat-panel TVs are almost on track to meeting initial forecasts, but a downturn in sales of room air conditioners and DVD recorders will see earnings fall below initial forecasts. Meanwhile, in the High Functional Materials & Components segment, earnings are expected to surpass initial forecasts due to a steady performance by Hitachi Metals, Ltd., Hitachi Chemical Co., Ltd. and other subsidiaries.
In light of these revised forecasts, Hitachi will take far-reaching countermeasures in each business, as part of efforts to shift to a highly profitable earnings structure. First, in the power systems business, Hitachi today (September 15) established the Supervisory Office for Power Systems, led by the president, along with project teams within the new unit, to ascertain the cause of turbine damage at nuclear power plants and implement countermeasures. Another task of this organization will be to identify issues relating to the cost overruns at an overseas thermal power plant project and improvement measures. Efforts will also be made to reinforce systems for winning new orders for overseas thermal and nuclear power plant projects and to develop energy technologies, including next-generation nuclear power technologies. In the HDD business, Hitachi will take various initiatives to improve earnings, including launching new products that employ perpendicular magnetic recording technology and reducing costs by improving productivity and by enhancing yields. In the room air conditioner and DVD recorder businesses, Hitachi will strive to strengthen competitiveness by launching new products that fit market requirements, lowering costs and taking other steps.
To further restore reliability of products and services and reinforce manufacturing, Hitachi today (September 15) established the Supervisory Office for MONOZUKURI, led by the president. This headquarters will enhance quality assurance-related education and systems, and bolster development and design processes. Other tasks of the organization include reinforcing risk and project management capabilities, and implementing company-wide activities to restore reliability of products and services.
In light of the large recent deterioration in business performance, Hitachi will reduce the monthly salaries of executive officers.
