Epson stages a come back

TOKYO: Japanese electronics maker Seiko Epson Corp, in the spotlight after a high-flying IPO this year, said on Wednesday it returned to the black in the latest quarter, helped by cost cuts and the digital camera boom.

After sinking into the red two years ago on a global downturn in semiconductor demand, the maker of Epson brand products is staging a comeback, having closed a domestic chip plant and concentrating on printers and electronic devices.

Net profit in the April-June first quarter was 5.97 billion yen ($49.80 million) compared with a loss of 1.07 billion yen in the same period last year.

The company, riding high on red-hot demand for digital cameras that has in turn boosted sales of its inkjet printers, said revenues grew 7.8 percent to 315.19 billion yen.

It also boosted its forecast for the half year to September 30, projecting net earnings of eight billion yen, compared with a previous forecast of 4.8 billion yen.

It kept its forecast for net earnings for the full year to March 31 to zoom 87 percent to 23.4 billion yen, although analysts expect the figure to be more like 30 billion yen.

While some analysts caution that the pace of Epson's earnings gains is boosted by low year-earlier numbers, others are more upbeat about growth opportunities.

Nikko Citigroup analyst Satomi Ushioda pointed to strong demand for its ink-jet printers, which account for more than 90 percent of earnings and generate funds for investment in growth areas such as liquid crystal displays.

Nikko Citigroup initiated coverage of Epson this week with a target price of 3,900 yen.

One of the world's biggest initial public offerings (IPOs) this year, Epson's sale of 50.8 million shares in June raised about $1.1 billion.

It also signalled that Japan's IPO market is heating up, thanks to an upturn in stock prices and demand from institutional investors looking for alternatives to under-performing blue chips.

Epson holds some 45 percent of Japan's home computer printer market, although that has fallen from a peak of 60 percent in the late 1990s due to inroads made by rival Canon Inc.

Epson's share price ended down 0.86 percent at 3,470 yen before the announcement, near its initial closing price of 3,510 on June 24 although the stock has risen as high as 3,870.

© Reuters