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Source: www.asiaecon.org |

HITACHI EXPECTS $8 BILLION LOSS


  Hitachi, a Japanese based electronics company, announced its expectations of a $8 billion loss for the current financial year, which will end in March. Hitachi decided to lay off 7,000 jobs in order to lower the losses resulting from operating expenses.


Hitachi, a Japanese based electronics company, announced its expectations of a $8 billion loss for the current financial year, which will end in March. Hitachi decided to lay off 7,000 jobs in order to lower the losses resulting from operating expenses.

Hitachi’s earlier speculations estimated profit to round up to $168 million. However, the decline in demand for its automobiles and industrial equipment, has left the company with slower sales and thus higher losses.

The announcement to lay off 7,000 jobs was targeted towards its electronics and auto departments.

Furthermore, the company decided to lower its fixed costs by 200 billion yens for the next fiscal year.

Net loss reached $4.1 billion during the 4th quarter of 2008, where it accrued profits of $140 million in the 4th quarter of 2007.

“Economic stagnation is expected to persist for the foreseeable future, making revenue expansion unlikely,” Hitachi said in a statement.

It added that it is “determined to implement far-reaching structural reforms” to survive the economic downturn.

The company said it aims to cut 200 billion yen in costs by March 2010 by scrapping unprofitable businesses and products, reviewing investments, closing plants and cutting workers.

It plans to cut about 4,000 workers worldwide from its automotive systems business and another 3,000 from its consumer business by the end of the next fiscal year.

While Japan has been expecting to enter a recession because of the global financial crisis, recent developments such as the fall in exports and lower domestic demand, accompanied by growing levels of struggling businesses, have caused the Japanese government to express fears of a recession more threatening than they had hoped.

The contraction rate of the world’s second largest economy by 1.8% is four times bigger than previously estimated ones, which raises fears of a long recession, possibly the longest Japan has ever seen throughout its history. GP Morgan revealed that the recession had already hit Japan by the end of 2007.

The Japanese economy, which is heavily reliant on exports, will continue contracting during this global crisis until the 4th quarter of 2009, where it will hit a record high not seen since World War II. This contraction is mainly due to the cutting off of production by major manufacturing firms as a result of declining global demand.

In response to these troublesome times, the Japanese government decided to increase its spending, with expenditures reaching $216 billion and constituting around 3.6% of Gross Domestic Product (GDP). Moreover, GDP data show that the economy contracted by 0.5% between July and September of 2008 which is much higher than the expected 0.1% rate

 

Source: asiaecon.org

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Source: www.asiaecon.org |


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