NEC profits soar


Among NEC's products are LCD displays, microchips, PCs and mobile phones

TOKYO, Japan -- NEC Corp, Japan's second-largest chipmaker, reported a group net profit of 7.23 billion yen ($62.1 million) for the June quarter on Thursday, a nine-fold jump in year-on-year terms.

According to the company, a rebound in the chip market and the company's restructuring efforts over the last year contributed to the bottom line.

"In addition to the market bottoming out, we achieved major fixed-cost reductions from last year's restructuring," it said in a statement.

The company also posted a 7.1 billion yen ($60.8 million) operating loss for the quarter, in line with expectations.

Revenue was down 9.2 percent year-on-year to 1.02 trillion yen.

Profit forecast still on track

Despite that, NEC maintains that it will hit its forecast for a 10 billion yen ($86 million) net profit for the year.

The company slashed fixed costs by 45 billion yen ($386.5 million) for the first quarter compared to the year before, and saw losses in its devices division shrink to less than one-quarter year-on-year.

"The effects of last year's restructuring in terms of fixed cost cuts were enormous," said executive vice president Shigeo Matsumoto.

In March NEC posted a record 312 billion yen ($2.68 billion) consolidated net loss after taking 300 billion yen in restructuring charges.

It cut 16,000 jobs last year and also announced on Thursday that it is planning to offer early retirement packages to between 4,000 and 5,000 aged 45 or older.

Aggressive restructuring

The policy of aggressive restructuring undertaken by NEC was necessary in part because of the company's heavy exposure to the slumping telecoms sector.

NEC is Japan's biggest mobile handset maker and was forced to cut its forecasts for handset shipments to a 20% drop from a 10% decrease.

The company is also one of the two largest computer companies in Japan with Fujitsu.

NEC announced its results after the close of trade on the Tokyo Stock Exchange. Shares finished 0.65 percent lower to 767 yen.