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December 24, 2010, 2:37 AM EST
By Adam Le and Masatsugu Horie
Dec. 24 (Bloomberg) -- Nitto Denko Corp., maker of optical film for about a third of the world’s LCD panels, will boost spending for the first time in five years as companies such as Sharp Corp. and Apple Inc. sell new tablet PCs and smartphones.
“Capital spending in equipment and facilities next fiscal year will be bigger than this year,” President Yukio Nagira said in a Dec. 22 interview, declining to give a specific figure.
Investment related to factories and production equipment, down by about 50 percent from 2006, is the company’s highest priority for using its cash, followed by dividend payouts, mergers and acquisitions, and stock buybacks, according to a document released in May. Nitto Denko spent about 75 billion yen ($903 million) on equipment and facilities in 2006, and plans to invest 36 billion yen this fiscal year.
Demand for touch panels used in smartphones, tablet computers and electronic book readers will grow “explosively,” said Nagira, who has been president of the Osaka-based manufacturer since 2008.
Researcher ISuppli Corp. in a September report estimated shipments of e-readers will rise more than five-fold from last year to 26.5 million units by 2014. Apple between April and September this year sold 7.46 million units of its iPad, which also has e-reader functions, according to Bloomberg data.
Acquisitions
Nitto Denko said in July it would invest about 20 billion yen over two years to increase production capacity of optical films for liquid-crystal displays. Nagira said the company will focus its investment on medical science, environmental technologies and new energy, including batteries, and is also considering acquisitions in these areas.
Nitto Denko hasn’t made an acquisition since it bought Florida-based Elan Transdermal Technologies Inc., a maker of skin patches, for $45 million in 2003.
The shares have risen 17 percent this year, outperforming the 1 percent increase by its peers in the 119-member Topix Chemical Index. Nitto Denko traded 0.4 percent lower at 3,785 yen as of 9:22 a.m. on the Tokyo Stock Exchange.
Sales of liquid-crystal display-related materials accounted for 44 percent of revenue last fiscal year. Films for touch panels now make up about 10 percent of Nitto Denko’s optical film sales, and the company is looking to increase investment in that area next year, Nagira, 62, said.
“Our touch panel film making facilities are sufficient at the moment, but we don’t know by how much demand will grow,” Nagira said. “We’ll look at the situation and decide on how to invest.”
--Editor: Drew Gibson.
To contact the reporter on this story: Adam Le in Osaka at ale14@bloomberg.net; Masatsugu Horie in Osaka at mhorie3@bloomberg.net
To contact the editor responsible for this story: Drew Gibson in Osaka at dgibson2@bloomberg.net.
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Dec. 24 (Bloomberg) -- Nitto Denko Corp., maker of optical film for about a third of the world’s LCD panels, will boost spending for the first time in five years as companies such as Sharp Corp. and Apple Inc. sell new tablet PCs and smartphones.
“Capital spending in equipment and facilities next fiscal year will be bigger than this year,” President Yukio Nagira said in a Dec. 22 interview, declining to give a specific figure.
Investment related to factories and production equipment, down by about 50 percent from 2006, is the company’s highest priority for using its cash, followed by dividend payouts, mergers and acquisitions, and stock buybacks, according to a document released in May. Nitto Denko spent about 75 billion yen ($903 million) on equipment and facilities in 2006, and plans to invest 36 billion yen this fiscal year.
Demand for touch panels used in smartphones, tablet computers and electronic book readers will grow “explosively,” said Nagira, who has been president of the Osaka-based manufacturer since 2008.
Researcher ISuppli Corp. in a September report estimated shipments of e-readers will rise more than five-fold from last year to 26.5 million units by 2014. Apple between April and September this year sold 7.46 million units of its iPad, which also has e-reader functions, according to Bloomberg data.
Acquisitions
Nitto Denko said in July it would invest about 20 billion yen over two years to increase production capacity of optical films for liquid-crystal displays. Nagira said the company will focus its investment on medical science, environmental technologies and new energy, including batteries, and is also considering acquisitions in these areas.
Nitto Denko hasn’t made an acquisition since it bought Florida-based Elan Transdermal Technologies Inc., a maker of skin patches, for $45 million in 2003.
The shares have risen 17 percent this year, outperforming the 1 percent increase by its peers in the 119-member Topix Chemical Index. Nitto Denko traded 0.4 percent lower at 3,785 yen as of 9:22 a.m. on the Tokyo Stock Exchange.
Sales of liquid-crystal display-related materials accounted for 44 percent of revenue last fiscal year. Films for touch panels now make up about 10 percent of Nitto Denko’s optical film sales, and the company is looking to increase investment in that area next year, Nagira, 62, said.
“Our touch panel film making facilities are sufficient at the moment, but we don’t know by how much demand will grow,” Nagira said. “We’ll look at the situation and decide on how to invest.”
--Editor: Drew Gibson.
To contact the reporter on this story: Adam Le in Osaka at ale14@bloomberg.net; Masatsugu Horie in Osaka at mhorie3@bloomberg.net
To contact the editor responsible for this story: Drew Gibson in Osaka at dgibson2@bloomberg.net.
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