Pentax Profit Boost Points to New Direction

May 13, 2007: Having cancelled a planned stock-swap merger with Hoya Corp in April, Pentax Corporation has now reported a group operating profit of 3.57 billion yen for the 2006 financial year, up from 805 million yen in the previous year.
Strong demand for DSLR cameras was a major contributor to the company’s strong position, according to a report in The Japan Times, which says the company is now in a position to “go it alone without Hoya”. Under a basic agreement Pentax signed with Hoya in December, the camera maker cannot enter into alliance talks with another company before 1 June. However, Pentax has been under pressure from its largest shareholder, the Tokyo-based asset management firm Sparx Group, to present an alternative that will increase its corporate value.
The report says Sparx supported the planned share-swap merger between Pentax and Hoya. However, Pentax Managing Director, Shinichiro Mitsuhashi, is quoted as saying: “Our corporate culture is totally different from each other. Pentax is a traditional, small factory type of firm while Hoya is an American-style company. I wonder if merging the two companies would be successful.”
Pentax executives have, apparently, submitted a three-year business plan to Sparx but the report says it is “short on specifics”. Under the plan, Pentax aims to “double its operating profit to 11.2 billion yen for its 2009 business year from 2006 and boosting its sales by 21 percent to 191 billion yen in 2009”. Hoya is also reported as still being interested in taking over Pentax. It has offered 770 yen per share in its bid, which Pentax has declined to accept. If Pentax’s shares do not surpass the Hoya offer, Pentax shareholders are likely to be dissatisfied with the plan, the report says. Pentax shares closed at 761 yen on Friday on the Tokyo Stock Exchange.