Shares in Japan's Hitachi Ltd dived 17 percent to a near 29-year low on Monday after its warning of a record $7.8 billion annual loss due to weak sales, a firmer yen and costs of restructuring its sprawling operations, reported Reuters.
Hitachi lost $1.9 billion in market value as investors damped its shares after Friday's warning of what would be the biggest ever full-year loss at a Japanese manufacturer and would wipe out a third of its shareholders' equity.
Hammered by the global recession, a growing number of electronics makers including Sony Corp and Toshiba Corp have issued loss warnings.
Hitachi's automotive components business has been battered by slumping car sales worldwide, while steep price falls, fierce competition and anemic demand are hurting its flat-screen TV operations, prompting it to announce a $2.2 billion cost-cutting plan on Friday.
"Since Hitachi's business portfolio covers a wide range, it was seen resilient to a downturn compared to companies like Toshiba that focus on the chip sector," said Standard & Poor's analyst Hiroki Shibata.
"But now its automobile, semiconductor, industrial equipment, flat TV -- almost all of its operations -- are facing an earnings slump, and conditions are very, very severe for it," he said. "It will probably take a long time to recover."
Shibata said any restructuring would take time for a big company like Hitachi, Japan's largest electronics maker with products ranging from rice cookers to nuclear reactors, and suggested it could need more drastic steps to turn itself around.
Hitachi said on Friday it now expects to post a net loss of 700 billion yen ($7.8 billion) for the business year to March 31, also hurt by a write-down of deferred tax assets following a dramatic fall in taxable income across the group.
The projected loss is far bigger than the consensus for a 54.8 billion yen loss in a poll of 12 analysts by Reuters Estimates before the revision, and compares with the company's previous forecast of a 15 billion yen profit.
The massive loss warning led Moody's Investors Service to downgrade its long-term debt ratings on Hitachi to A2 from A1, which could raise its borrowing costs. It puts Hitachi's ratings under review for a possible further downgrade.
Hitachi still expects to book an annual operating profit, but cut the forecast by 90 percent to 40 billion yen. Its shares closed down 17 percent at 244 yen, the lowest since April 1980.
The electronics conglomerate said it would exit unprofitable businesses, close plants and take other restructuring steps in a bid to cut 200 billion yen in fixed costs by March 2010.
Hitachi, which has about 400,000 group employees, also plans to cut jobs as part of restructuring, but did not say how many.
"Hitachi's restructuring has been a lap behind its rivals and it has had many things to tackle, but its earnings were strong until the first half because the market was good," said Daiwa Institute of Research senior analyst Masaharu Sato.