Sanyo Electric posted a swing to an annual operating profit after cost cuts more than offset slow digital camera sales, but forecast an unexpected earnings decline this year due to higher raw material prices.
Sanyo, the world's largest rechargeable battery maker which competes with smaller rivals including Sony, enjoyed strong solar cell demand, but its digital camera operations were hit by fierce competition with established brands such as Canon as well as emerging Asian suppliers.
The Osaka-based company on Monday forecast a 9.2 per cent fall in operating profit to 45 billion yen ($370 million) for the year to March 2008 due to rising prices for raw materials it uses in rechargeable batteries, such as nickel and cobalt.
Cobalt prices hit 11-year highs in April due to growing demand for rechargeable batteries for personal computers, digital cameras, mobile phones and portable music players.
At the net level, Sanyo expects its first annual profit in 4 years in the current business year.
The company forecast a net profit of 20 billion yen for the year to March, against a loss of 45.36 billion yen a year earlier, when its bottom line was weighed down by restructuring charges.
Sanyo, who replaced Toshimasa Iue, the grandson of the company's founder, in April as president, also said he aims to draw up a preliminary midterm business plan by September.
In the year ended March 31st, Sanyo's operating profit totalled 49.57 billion yen, turning around from a 17.15 billion yen loss a year earlier. Sales slid 7.6 per cent to 2.215 trillion yen.