Dec 4th - Cash in hand, Japanese companies head for growth

Japan's  technology leaders are mobilizing their substantial cash reserves for new charges at growth, with some setting their sights on mergers and technology acquisitions.

Their industry, like others, went into savings mode after the financial crisis erupted. The sector's top seven firms had about 2.2 trillion yen in cash tucked away at the end of September, 14% more than a year earlier and 17% more than at the end of March 2008. Cash on hand was above pre-crisis levels at all but Seiko Epson Corp.and their pockets will likely be even deeper at the end of this coming March.

Fujifilm chemists are working on ingredients for cosmetics, one of the areas that the company is branching out into.

Fujifilm Holdings Corp.'s cash has grown 26% from the close of March 2008 to 418.4 billion yen. The company plans to set aside an average of 50-100 billion yen a year for M&As over the three years starting fiscal 2011.

One possible target area is medical information technology. Fujifilm aims to double sales in its medical systems and life science businesses to around 500 billion yen in fiscal 2013.

Canon Inc. will have 810 billion yen in cash at month's end, up 15 billion yen from a year earlier. Free cash flow is projected to increase 20% from the forecast for this fiscal year ending this month to about 400 billion yen in fiscal 2012. The company will divert some of this toward emerging-market-related investments and acquisitions in the medical field, among other outlets.

Nikon Corp. had 40% more cash on hand at the end of September than before the crisis and expects to have 160 billion yen at fiscal year-end. It is aiming for fiscal 2012 sales to be up 40% over last fiscal year's on the back of its core businesses of digital cameras and photolithography steppers. Starting next fiscal year, Nikon will increase spending on next-generation, liquid-immersion LCD steppers and also look into M&As as a way into new lines of business.

Konica Minolta Holdings Inc. will direct cash toward investments in production of office equipment geared to emerging markets.

Fujifilm and Nikon have been operating essentially debt-free since the end of March, with cash in excess of interest-bearing debt. Although some precision equipment makers still want to save for a rainy day, many are looking "to get back on the offensive," in the words of Canon Executive Vice President Toshizo Tanaka.