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Hitachi fiscal loss goes nuclear

Turbine repair, electronic media steal Hitachi's purse

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Hitachi fell into deep red during fiscal 2006, posting a net loss of 32.8bn yen ($271.6m), compared with a profit of 37.32bn yen ($309m) a year earlier.

Japan's biggest electronics conglom attributes the money dive to the cost of nuclear reactor turbine repairs and the poor performance of its hard drive and flat panel TV operations.

"We are not raising a flag of surrender," Hitachi CEO Nakamura said in a press conference. "We haven't given up on returning these businesses to profitability. We are not considering withdrawing from these businesses."

Company coffers felt the squeeze from a 70bn yen ($579m) bill to repair faulty turbines at nuclear plants operated by Chubu Electric Power and Hokuriku Electric Power and from the construction of a thermal power plant in the US.

Hitachi said its electronics media division suffered from sinking prices in the market, resulting in an operating loss of 58.4bn yen ($483.5m), down from a loss of 35.7bn yen ($295.6m) a year earlier.

The HDD division had an operating loss of 43.7bn yen ($361m), wider than the previous fiscal year's loss of 27bn yen ($223.5m).

Overall, the company's finances, however, looked far less bleak than Hitachi's previous forecast of a 55bn yen net loss ($455.4m) for 2006. The damage was offset by an increase in total sales, lead by its construction equipment division.

Total sales rose 8.3 per cent to 10.24 trillion yen ($84.8bn), from 9.47 trillion yen ($78.4bn) last year.

Hitachi expects to swing back into the green for the current fiscal year, ending March 2008. The company forecasts a net profit of 40bn yen ($331.2m) and sales increasing two per cent to 10.5 trillion yen ($86.9bn). ®

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