Sumitomo Osaka Cement Co is unlikely to meet its 400 million yen operating profit target set for its optoelectronics and advanced materials operations in fiscal 2005, especially in light of the 200 million yen operating loss these businesses posted in the April-June quarter. At the advanced materials division, the company lowered its prices for plasma display panel films by around 30%, succumbing to strong pressure from customers. And at the optoelectronics segment, shipments of LN modulators rose 30% on the year, but their prices fell by around 20%.
Despite the poor performance, Sumitomo Osaka Cement’s group operating profit is expected to climb 13% to 14 billion yen this fiscal year on a 1 billion yen upgrade in the earnings projection at its mainstay cement operations. Because the earnings increase in the cement business stems from the high levels of natural disaster reconstruction and that domestic demand will likely resume its downward trend in fiscal 2006, the firm urgently needs to devise measures to lift the bottom line in its optoelectronics and advanced materials operations.