EPSON SWINGS TO PROFIT DUE TO COST CUTS

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Epson swings to profit in Q1 on cost cuts
TOKYO, July 26  – Seiko Epson Corp. said on Wednesday it swung to a profit in the latest quarter as it phased out low-end ink jet printers that were eating into earnings, and kept its full year forecast for a 55 percent profit gain.Seiko Epson, the world’s second-largest ink jet printer maker after Hewlett-Packard , has been overhauling its printer line-up to reduce cheaper models that don’t consume a lot of ink and are particularly susceptible to price declines.That strategy appears to be paying off.”There are some differences among each of our businesses but overall we are off to a good start,” Kenji Kubota, a managing director at Seiko Epson, told a news conference.Seiko Epson reported a group operating profit of 7.01 billion yen ($59.9 million) in the three months to June 30, a sharp turnaround from a loss of 5.04 billion yen in the same quarter last year. Sales fell 5.3 percent to 322.04 billion yen.The quarterly profit performance handily beat the average of 4 analysts polled by Reuters for a loss of 2.15 billion yen.Seiko Epson, which also makes small liquid crystal displays and chips for mobile phones, stood by its forecast for an operating profit of 40 billion yen in the full year to March, up from a 25.7 billion yen profit in the prior year.Operating income in its information equipment division, which handles ink jet printers and laser printers, rose to 14.1 billion yen in the April-June period from a 4.2 billion yen profit a year earlier, also helped by lower marketing costs.Its electronic devices division remained in the red with a loss of 5.3 billion yen, as revenues tumbled due to sliding prices of LCDs and weaker sales in its chip operations, which embarked on a large-scale restructuring earlier this year.

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July 28, 2006 at 11:29 AM