Panasonic Corp forecast its operating profit will more than triple in
the year to March 31 as it steps back from struggling operations in TVs
and other consumer gadgets in favour of selling machinery, components
and electronic equipment to other businesses.
The company expects
operating profit to rise to 160.9 billion yen in the current business
year from last year's 43.7 billion yen. That compares with an average
241 billion yen forecast from 18 analysts surveyed by Thomson Reuters
I/B/E/S before the company released its latest earnings figures on
Panasonic's CEO, Kazuhiko Tsuga has promised to weed out
within two years any loss-making or low-profitability units that fall
short of a 5 percent annual operating margin threshold. Further
restructuring, however, could add to costs and squeeze its bottom line.
strategy to pull away from consumer electronics contrasts with domestic
rival Sony Corp, which is doubling down on mobile phones, cameras and
game consoles in a bid to revive the fortunes of its core consumer
electronics business, which still accounts for more than half of
At Tsuga's company, TVs, DVD players and other home
entertainment gadgets represent less than one-fifth of sales, leaving it
more options to pursue profits elsewhere. Panasonic's biggest earning
segments are appliances, such as washing machines and refrigerators, and
the division it dubs "eco solutions", which makes light fixtures,
toilets, ceiling fans and other household fittings that hark back to the
company's beginnings in 1908 making electrical extension sockets.
October, Tsuga bit the bullet on non-performing businesses by writing
down billions of yen in tax-deferred assets and goodwill related to its
businesses making mobile phones, solar panels and small lithium
batteries. The result was a net loss of 754.25 billion yen last business
year, nearly matching the prior year's record 772.17 billion yen loss.
Sony, however, the company is relying on asset sales to underpin its
finances as it tries to revive profit growth, pledging to keep annual
free cashflow above 200 billion yen. Its disposals have included a Tokyo
office building and $1 billion worth of stocks in companies such as
Toyota Motor Corp.
The value of the company's assets fell to 5.4
trillion yen at the end of the latest business year from 6.6 trillion a
year earlier, as a result of asset disposals and writeoffs.
the next two years, Panasonic, which has seen its sales shrink by
one-fifth from a peak of $92 billion six years ago, plans to spend $2.5
billion to revamp its businesses.
It has yet to announce
additional staff cuts, after shedding 40,000 jobs over the past two
years. With 300,000 workers it remains one of Japan's biggest employers.
the start of the year, the company's shares have gained 43 percent,
keeping pace with a 40 percent rally in the benchmark Nikkei average as
weakness in the yen boosted the outlook for exporters. Panasonic's
shares rose 3.7 percent on Friday to close at 749 yen before it released
its latest earnings figures.
© Thomson Reuters 2013