Pressure grows on Olympus for capital deal as liquidity gauge drops
By Mari Saito
TOKYO (Reuters) - Pressure mounted on Japan's Olympus Corp to clinch a capital deal as its loss-making camera unit further slashed earnings and undermined the ability of the scandal-hit company to meet financial obligations.
Shareholders' equity fell to 2.2 percent of total assets in June from 4.6 percent in March. The decline in the ratio, a key barometer of a company's liquidity, takes Olympus further away from the 20 percent level widely regarded by analysts as indicative of financial stability.
The 93-year-old manufacturer of cameras and medical equipment has held talks with several Japanese companies including FujiFilm Holdings and Sony Corp on a capital tie-up as it tries to mend its severely depleted balance sheet hit by a massive accounting scandal last year.
"They must raise equity soon, but we don't know where the story will end," said Nanako Imazu, an analyst at CLSA Asia Pacific Markets in Tokyo. "Why are they so relaxed?"
Olympus Senior Executive Managing Officer Yasuo Takeuchi acknowledged that the company needs a capital injection before its business year ends in March 2013. He denied that the company was dawdling in its talks with potential partners.
"We have received several different types of proposals, and I cannot pinpoint exactly why the negotiations are taking time. We're not doing this in a leisurely, relaxed manner," he told reporters after the company posted a 60 percent slump in operating profit for April-to-June.
Operating profit dropped to 2.12 billion yen ($27.05 million) in the quarter after an operating loss at Olympus' camera division and a stronger yen offset a profit gain at the company's medical equipment division.
The stronger yen reduced overall quarterly operating profit by 2.6 billion yen, the company said. Olympus kept its full-year operating profit forecast at 50 billion yen. Continued...