Japan Electronics Sector Income Gaps Clarify


The revenue gaps between major Japanese electronics makers are becoming evident, with companies such as Sony Group Corp. and Hitachi Ltd. flourishing while Panasonic Corp. and Toshiba Corp. face tough times.

In fiscal 2020, which ended in March, Sony group consolidated net profit exceeded 1 trillion yen for the very first time. Hitachi has also seen its net profit reach record highs.

They have performed exceptionally well in reorganizing their business structures by accurately understanding changes in society and the business environment, analysts said.

“We are seeing dramatic changes in the environment, so the leadership’s willingness to keep moving forward is important,” Sony Group President and CEO Kenichiro Yoshida said at a business strategy meeting last Wednesday.

The company suffered a net loss for six of the seven years in fiscal 2008, when it struggled amid the fallout from the collapse of US investment bank Lehman Brothers.

The Sony group overcame the crisis by boldly revising its commercial structure. Specifically, the company has expanded its business to include games, financial services, and movies in order to build a system that allows it to continuously generate stable profits through fee income and other earnings.

As a result, the company was able to increase its profits in fiscal 2020 by meeting demand from people staying at home amid the novel coronavirus pandemic.

Hitachi accelerated the shift to an information technology-centric business structure. IT operations now represent more than half of the company’s consolidated operating profit.

Ryosuke Katsura, senior analyst at SMBC Nikko Securities Inc., which is versed in the electronics industry, said, “Sony Group and Hitachi have made management decisions based on clear visions.”

At the same time, Panasonic has repeatedly undertaken restructuring measures in response to declining profits. But the share of sales of household appliances such as air conditioners and refrigerators in its overall sales remains high.

In addition, Panasonic’s automotive battery business for supply to US electric vehicle maker Tesla Inc. has failed to perform, even though it has invested heavily in the region.

Toshiba, which had sold its memory chip operations to compensate for the decline in its business, has still not been able to fully cover the loss of revenue resulting from the sale.

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