Hitachi Ltd. said Wednesday its group net profit in the year that ended in March jumped nearly six-fold from a year earlier to a record 501.61 billion yen ($4.6 billion) due to robust demand for IT-related services and cost-cutting efforts.
The outcome, also boosted by a special profit of 278.8 billion yen from the sale of its chemical unit to Showa Denko K.K. in the April-June quarter, beat its earnings projection released in February for a net profit of 370 billion yen.
The Japanese industrial conglomerate said on the same day that it will sell a more than 50 percent stake in its metals unit for 382 billion yen to a consortium of investment funds led by U.S. private equity fund Bain Capital.
The Japanese-American consortium plans to acquire all shares, including those held by general shareholders, for 816.6 billion yen through a tender offer, which is expected to be completed by the end of fiscal 2021.
Hitachi Metals Ltd., currently listed on the Tokyo Stock Exchange, posted a net loss of 42.21 billion yen in the year through March, a second straight year of record red-ink.
It has also announced cutting about 3,200 jobs, mainly in Japan, following a scandal involving falsified test results to check the quality of special steel and magnet materials and weak demand amid the virus pandemic.
Hitachi has rapidly overhauled its group businesses to concentrate on the information technology sector while shedding non-core operations.
In fiscal 2020, Hitachi posted a group operating profit of 495.18 billion yen, down 25.2 percent, on sales of 8.73 trillion yen, down 0.4 percent amid the coronavirus pandemic.
Despite a challenging business environment, the IT segment drove the overall performance, with its operating profit margin rising to a record 13.2 percent, Hitachi said.
The company added that it also achieved a cost reduction of over 120 billion yen from the previous fiscal year.
Hitachi projects that its net profit will rise 9.6 percent to 550 billion yen in the year ending March 2022. Sales are projected to gain 8.8 percent to 9.5 trillion yen, while an operating profit of 740 billion yen is expected, up 49.4 percent.
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