Struggling Japanese electronics maker Sanyo Electric Co Ltd said on Tuesday it would cut 15 percent of its global workforce, shutter plants and halve debt in a sweeping restructuring to return to profit.
Sanyo tracks rival consumer electronics makers having to undergo major restructuring amid intense price competition for televisions and other digital products. Sony Corp and Matsushita Electric Industrial are also cutting jobs.
The overhaul comes after Japan's third-largest consumer electronics maker posted a big loss in fiscal 2004, hammered by earthquake damage to a chip factory and sluggish sales of core products such as digital cameras and mobile phones.
The formidable challenge of reorganising Sanyo's vast business interests falls on two executives, Chief Executive Tomoyo Nonaka and President Toshimasa Iue, who got their jobs in a reshuffle of top management approved by shareholders last week.
They billed the restructuring as the company's third birth following its founding in 1947 and a merger in 1986.
"We have to be ready to feel some pain under this new strategy, which marks the third start for Sanyo," Nonaka told a news briefing in Osaka, monitored by reporters in Tokyo. "There will be no sacred cows," Iue said.
The executive team vowed to focus on rechargeable batteries, solar cells and other areas where it has strong technology and a competitive advantage, while pulling out of businesses unable to produce an operating profit margin of at least 5 percent.
Sanyo said it will cut about 14,000 jobs, including 8,000 in Japan where salaries are typically much higher than overseas. The company plans to cut 3,800 employees in Japan in 2005/06, the first year of the three-year plan through March 2008.
It also unveiled plans to close or sell the equivalent of 20 percent of factory floor space in Japan, slash 70 billion yen ($627.1 million) in costs, and cut its 1.2 trillion yen of interest-bearing debt by roughly 600 billion yen.
Sanyo's semiconductor operations were hit hard when a major earthquake last October damaged a domestic factory. It is struggling to return its home appliances division to profit, and slowing growth in the digital camera market has also hurt.
The company posted a net loss of 171.54 billion yen in the year ended March 31 and is forecasting a net loss of 92 billion yen this year.
Sanyo aims to achieve a group operating profit margin of 5 percent in 2007/08, compared with less than 2 percent last year.
The company said it would reduce current assets by 130 billion yen and liquidate 70 billion yen of fixed assets and debt, but it declined to say exactly which businesses it would withdraw from or which factories in Japan it planned to close.