March 28-- Mitsubishi Electric Corp., a Japanese maker of factory machinery and mobile phones, said it aims to cut raw materials costs 20 percent by March 2009, partly by replacing copper with iron or aluminum in some products.
The company expects to save about 400 billion yen ($3.4 billion) in the period, Kunio Tomita, senior executive officer of procurement, said today at a press briefing in Tokyo. The target is highest on record for the company.
"It will be a real challenge to meet this goal," said Tomita. He said the company will also lower expenses by working with suppliers before placing orders for materials or developing new products.
Mitsubishi Electric's goal to pare spending on materials comes as copper prices have quadrupled in the past four years, fueled by demand for construction and manufacturing in China, the world's fastest growing major economy.
The company today said rising prices for oil, aluminum and copper added 50 billion yen to procurement costs over the past two years. Spending on raw materials will reach about 1.776 trillion yen for the two years ending March 2009, according to the company's estimates.
Factory Boom
Mitsubishi Electric on March 26 boosted its profit targets this year, benefiting as companies such as Toyota Motor Co., Japan's biggest automaker, and Sharp Corp., the nation's biggest maker of liquid-crystal display televisions, expand production capacity to meet global demand. The company is forecasting a fifth year of increase in operating profit and its second-highest revenue ever.
Operating profit will probably rise 46 percent to a record 230 billion yen for the year ending March 31, compared with the previous outlook for 180 billion yen. Sales will probably gain 6 percent to 3.82 trillion yen, beating the earlier goal of 3.70 trillion yen.
The company's shares gained 1.9 percent to 1,213 yen as of the close in Tokyo. The stock has jumped 12 percent so far this year, after gaining 30 percent last year and 66 percent in 2005.
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