Renesas forecasts flood of red ink

Renesas forecasts flood of red ink

LONDON – Struggling Japanese chip firm Renesas Electronics Corp. has forecast it will make a net loss of 150 billion yen (about $1.91 billion) driven by restructuring costs for the fiscal year ending March 31, 2013, as it published sales down 11 percent sequentially for the first fiscal quarter, ended June 30.

The Renesas results and forecasts taken together indicate that an exceptionally large net loss of 81.7 billion yen (about $1.04 billion) will be endured albeit on increasing sales in the current quarter – Renesas' second fiscal quarter. This is expected to be related to very large restructuring costs.

Renesas, which has been loss making for many quarters, has been trying to raise about $1.3 billion to execute a rescue plan that involves laying off about one third of its workforce and closing more than half its domestic manufacturing sites.

The company, created from the chip making interests of Hitachi, Mitsubishi Electric and NEC, started trading in its present form on April 1, 2010. Even though it was tipped to be the fourth largest chip company in the world and to do well from its economies of scale it has been making losses.

For the first fiscal quarter Renesas reported a net loss of 20.8 billion yen (about $265 million) on sales revenue of 186.6 billion yen (about $2.38 billion). Sales revenue is down sequentially by 11.0 percent from 209.7 billion yen (about $2.68 billion) while the loss increased from one of 18.2 billion yen.

Renesas forecasts much more red ink coming along. For the first six months of the fiscal year Renesas said the net loss would be sharply up at 102.5 billion yen (about $1.31 billion) on sales revenue of 406 billion yen (about $5.18 billion). The loss making continues but rate is set to reduce over the two winter quarters Renesas predicts. For the full fiscal year ending March 31, 2013, Renesas forecasts a net loss of 150 billion yen (about $1.91 billion) on sales revenue of 883.1 billion yen (about $11.3 billion).


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