Shima Seiki Manufacturing Ltd., a Japanese maker of knitting machines, fell the most in more than eight years in Osaka trading after profit missed its forecast and the company was cut to ``neutral'' at Nomura Securities Co.

The shares plummeted by the daily limit of 500 yen, or 11 percent, to close at 3,910 yen, on the Osaka Securities Exchange, the sharpest slide since October 1999. The company was the second-biggest loser among 1,723 companies on the Topix index.

Net income for the year ended March 31 was 9.96 billion yen ($95 million), falling short of the company's 11 billion yen forecast by 9.5 percent, Shima Seiki said in a release submitted to the Tokyo Stock Exchange on May 2. It earned 3.1 billion yen a year earlier.

``Profit missed the forecast because the yen strengthened against the dollar more than we had expected,'' said company spokesman Toshihiko Tonai. The company assumed the yen would average 113 yen per dollar in the year just ended, whereas the Japanese currency was at 99.69 as of March 31. Devalued inventory at an Italian subsidiary also hurt earnings, Tonai said.

The company expects profit to rise 0.4 percent to 10 billion yen this fiscal year, lower than the median estimate of 13.1 billion yen by six analysts polled by Bloomberg.

Shima Seiki predicts sales of 12,000 flat knitting frames this year, a 2.3 percent decline, Tonai said. The company expects to raise profitability by shifting to high-value-added products and by focusing on European and Chinese markets, he said.

Nomura Securities analyst Shigeki Okazaki cut his estimate for Shima Seiki's Chinese sales this year, citing lower investment by companies there due to a downturn in U.S. consumption, according to a report dated today.

Okazaki cut his net income estimate for Shima Seiki by 13 percent to 10.5 billion yen, and lowered the shares from ``buy.''

The stock has declined 25 percent this year, compared with a 5.6 percent drop in the benchmark Topix index.

To contact the reporters on the story: Akiko Ikeda at [email protected]; Hideki Sagiike at [email protected].