Hoya's CEO Hiroshi Suzuki
Hoya's CEO Hiroshi Suzuki
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Hoya Corp reported stagnant results for the April-June 2008 quarter.

Sales declined 6.1% to ¥130.156 billion (approx US$1.18 billion) and operating income decreased 8.2% to ¥21.857 billion, compared with the previous year's results including those of Pentax Corp, which Hoya bought out in March 2008.

Earnings lowered as Pentax units recorded small losses and sales of mask blanks and photomasks for semiconductor manufacturing decreased.

Sales of mask blanks and photomasks for semiconductor manufacturing dropped 14% and 8% year-on-year (YoY), respectively. Hoya was hit by reduced development budgets at semiconductor manufacturers, it said.

Orders from Europe remained sluggish following the preceding quarter, while orders from Korean and Taiwanese manufacturers did not grow, according to Hoya.

Meanwhile, sales of masks for LCD panels increased 6% YoY.

"Taiwanese LCD panel manufacturers have reduced production by more than 15%, but oversupply is likely to continue until mid 2009," Hoya's CEO Hiroshi Suzuki said. "Trends in the panel market and the mask market don't really correlate in the panel market and the mask market. As panel manufacturers are currently replacing tools in an effort to cut costs, sales growth is expected to continue at our mask business for more than one year from now."

Volume production of discrete track HDD to start 'in 2 to 3 years'

Sales of glass memory discs for HDDs increased 5% YoY. Average selling price, however, decline about 7 to 8% compared with the preceding quarter.

Commenting on discrete track media, which Toshiba Corp is planning to launch in about 2009, Suzuki said, "They will be launched as planned, but volume production in earnest will only start in two years, or three years in the worst scenario. To lower the cost to a marketable level, the technology must be advanced one or two steps forward," expressing his view.

Optical lens sales fell as much as 18% YoY. Hoya's market share is shrinking, due to factors that the company misread demand for mobile phone applications, Chinese manufacturers gained shares by lowering prices of their products for digital camera applications, and Taiwanese and Korean application manufacturers began manufacturing more optical lenses in house, for example, Hoya said.

From now, the company will attempt to expand its business through entering the SLR camera lens market, which it has been holding back from entering as it believes margins are lower than for compact cameras lenses. It will also increase marketing of optical pickup lenses for Blu-ray Disc drives, for which demand is expected to strengthen.

Digital camera business to be downsized

Concerning the digital camera business operated by Pentax, Hoya said it will aim to secure its profit by reducing the business scale from now on. Amid the market environment, where the price competition intensified and sales growth of SLR products slowed, financial results of Pentax also plunged with unit sales decreasing and unit price lowering in the April-June quarter.

A sales decline of about 20% is anticipated to continue in the July-September quarter, as the business unit is building up inventory, lagging behind its rivals and market demand when releasing products, according to Hoya. The company is planning to cut costs by streamlining its bases in Japan by shifting production overseas and outsourcing, as well as reducing production to an appropriate level from now, it said.