Toshiba sees the light
TOKYO, June 5 (Reuters) – Japan’s Toshiba Corp aims to more than triple sales at its lighting operations in 12 years by phasing out incandescent lights and switching to energy-saving LEDs as power costs and concerns about greenhouse gas emissions rise.
Toshiba, which competes in the lighting business against General Electric Co, Philips and Osram, is betting on its light-emitting diode (LED) fixtures for homes, offices and public facilities to fuel growth in Europe, the United States, Russia and China, its president said on Thursday.
Sales of LED lights would make up 1 trillion yen ($9.5 billion) of sales in 2020, yielding Toshiba 20 percent of the global share for such low-power lights, President Atsutoshi Nishida told Reuters in an interview.
Analysts and industry sources estimate Toshiba’s lighting sales for the year ended in March around 280 billion yen to 300 billion yen.
“We have the technological advantage, and now is our chance to expand globally in the lighting business,” Nishida said. “We may eventually need to build new factories abroad.”
LED lights last longer and cut greenhouse gas emissions to one-sixth of those of incandescent lights, but are more expensive.
According to Toshiba, which developed Japan’s first light bulb, switching 60 percent of the world’s incandescent lights to LED lights would slash greenhouse gas emissions by 125.5 million tons in 2025 compared with in 2000.
The Japanese government has instructed manufacturers to end incandescent light production by 2012, while Australia and France have made similar decisions. Toshiba is phasing out production of most of its incandescent lights by 2010.
Its LED operations would also help Toshiba, whose main profit earners are semiconductors, laptops and power systems, lift profitability in its appliance segment, whose operating profit fell 60 percent in the year ended in March.
But the company is unlikely to look to acquisitions for growth in its lighting business, and would seek partnerships to secure sales routes instead, Nishida said.
Nor would the company bid for GE’s appliance unit, he said. GE has named China’s Haier, South Korea’s LG Electronics, Sweden’s Electrolux, Mexico’s Controladora Mabe and Turkey’s Arcelik as potential bidders.
“GE has the brand. But we are not attracted to the appliance unit’s technology,” Nishida said.
LOOKING BEYOND CHIPS, NUCLEAR
Toshiba, whose social infrastructure and devices segment accounts for over 85 percent of its operating profit, seeks growth from areas other than its semiconductors and power plants, which are vulnerable to price fluctuations and seasonality in order flows.
Nishida has said he hopes to make Toshiba’s digital products segment a third pillar of growth.
That segment had an operating profit margin of 0.5 percent in the year ended in March, after Toshiba lost the format battle for next-generation DVDs to the Blu-ray camp, led by Sony Corp, and withdrew from HD DVDs.
Challenges to the segment include weak prices in hard drives amid escalating competition from companies such as Seagate Technology, Western Digital Corp and Hitachi
“Consolidation is going to be necessary,” Nishida said, without elaborating.
Analysts have said Toshiba could team up with peer Fujitsu Ltd, which is struggling to turn around its loss-making hard disk drive business.
Shares of Toshiba closed down 1.3 percent at 933 yen, compared with a 0.7 percent fall in the benchmark Nikkei average