A report on Bloomberg says the firm may review unprofitable product lines as it seeks to boost earnings and build funds for expansion overseas.
"We want to go crazy in the world," Tomy president Kantaro Tomiyama (pictured) said. "America and China aren’t easy so we need to build up our strength first."
The firm is reportedly planning overseas expansion after the country’s toy market shrank 1.2 per cent in the year to March 31st to 663.6 billion yen, according to The Japan Toy Association. Toy sales are down by about nine per cent since 2004 because of Japan’s falling birth rate.
"Initiatives to access new markets are necessary for Tomy, including tie-ups with other companies", Etsuko Tamura, an analyst at Mizuho Investors Securities said.
The company forecasts its operating profit margin will widen to eight per cent in the fiscal year ending March 2012. That level of profitability would provide enough cash flow for the company to invest abroad, Tomiyama said.
It expects its operating profit margin this year to rise to four per cent from 2.8 per cent in 2008. It forecasts a six per cent operating profit margin next year.
“We should be able to reach six per cent, but trying to get to eight per cent will be a big hurdle,” Tomiyama said. He wouldn’t specify which areas the company may review or say what product lines are unprofitable.
Earlier this year the firm announced plans to tie up with investment fund Marunouchi Capital, established by Japan’s largest trading house Mitsubishi Corp. and financial services company Mitsubishi UFJ Securities.
It plans to tap into the trading company’s global distribution network to reach overseas markets. It is jointly creating an animation program with Future Planet a Japanese content creation company, that will be broadcast on China’s CCTV network starting in August.