Renesas expects a record annual net loss of $1.9 billion

Article by Christian A., on August 5, 2012

Citing plummeting prices and aggressive overseas competitors, Renesas Electronics predicted that it will post a record annual net loss of 150 billion yen ($1.9 billion). Renesas, the Japan-based manufacturer of microcontroller chips, said that its market share has narrowed considerably in the past few years as the strengthening yen pulls down the overseas profits as competition from companies like Samsung Electronics leads to fewer orders. Renesas is on course to report losses for the third consecutive year. It hopes to avoid bankruptcy by reducing its work force and selling off plants. Last February, Japanese chipmaker Elpida Memory Inc., had filed for bankruptcy protection.

For the quarter from April to June, Renesas reported an operating loss of 17.6 billion yen, which is slightly better than the 19.1 billion-yen loss posted a year ago after it had closed plants after the natural disaster that occurred in Japan last year. Renesas said that it would get back to being profitable on an operating level, predicting a profit of 21 billion yen for the year that ends in March 2013. However, restructuring costs and other losses would result to a net loss that would more than double the 62.6 billion-yen net loss in the prior year. When interviewed at a media briefing after the results were announced, Renesas President Yasushi Akao said that semiconductor sales are expected to improve in the later part of the year.

The company is also likely to post a profit in the full-year to March. However, restructuring costs and special losses will result to a 150 billion-yen net loss. Renesas said that its prediction for a full-year operating profit, which was well ahead of market forecasts for a 28.3 billion-yen operating loss, was made because of a forecasted increase in microcontroller chip sales in the second half of the year. It also anticipated a bump in system-on-chip sales from the second quarter, particularly for chips used in game consoles. Renesas said that semiconductor sales for the year to March are predicted to reach 810 billion yen.

Topics: renesas, loss

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