BackPanasonic profit forecast misses analyst estimates on TVs
Firm says net income will probably be ¥50 bn in the year started 1 April, compared with a net loss of ¥754 bn in the previous year
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Tokyo: Panasonic Corp. forecast annual profit that missed analyst estimates after Japan’s second- biggest television maker continued to lose market share to Samsung Electronics Co. and LG Electronics Inc.
Net income will probably be ¥50 billion ($495 million) in the year started 1 April, compared with a net loss of ¥754 billion in the previous year, the Osaka-based company said in a statement on Friday. The forecast missed the ¥63.7 billion average of 16 analyst estimates compiled by Bloomberg.
President Kazuhiro Tsuga plans to spend ¥250 billion on restructuring during the next two years to end losses from TVs, semiconductors, mobile phones, circuit boards and optical devices, adding to ¥1.1 trillion spent since 2011. Panasonic, which has lost more than ¥1.5 trillion in the past two financial years, fell further behind South Korea’s Samsung and LG in the global TV market in 2012.
“Panasonic’s consumer electronics business is in a secular decline," Damian Thong, a Tokyo-based analyst at Macquarie Group Ltd., said before the earnings. “Panasonic is losing ground in televisions and lacks a significant position in smartphones and tablets, which are central to the consumer electronics business today."
Panasonic rose 3.7% to close at ¥749 in Tokyo trading before the announcement. The stock has gained 43% this year, compared with an 87% increase by Sony Corp. and a 41% advance by Japan’s benchmark Nikkei 225 Stock Average.
Operating Targets
Full-year operating profit for the maker of Lumix cameras and Viera televisions will rise 55% to ¥250 billion while sales will fall 1% to ¥7.2 trillion, Panasonic said.
Tsuga announced a three-year revival plan for Panasonic in March, outlining a target to boost the company’s operating margin to 5% by eliminating losses at five divisions and pursuing growth in businesses including housing, eco-solutions and automotive products.
Panasonic will stay in the plasma TV business and try to make it profitable, Tsuga said in March. The TV operation has been unprofitable since April 2008, according to Chieko Gyobu, a Panasonic spokeswoman. Sony, Japan’s biggest TV maker, said on Thursday its TV unit lost money for a ninth straight year.
Television Losses
Panasonic expects it television losses to narrow to ¥34 billion this year from a loss of ¥88.5 billion. Sales will fall 16% to 11.5 million units this year, the company said.
“We made significant efforts in terms of restructuring," chief financial officer Hideaki Kawai told reporters in Tokyo on Friday. “More needs to be done this fiscal year and we will carry out measures with speed."
Panasonic’s share of revenue in the global flat-panel TV market dropped to 6% last year from 7.8% in 2011, according to Santa Clara, California-based DisplaySearch. Suwon, South Korea-based Samsung boosted its share to 27.7% while Seoul-based LG expanded its share to 15% from 13.8%, according to the researcher.
Sony said on Thursday net income may rise 16% this fiscal year as the company expects to sell more TVs and smartphones. The yen’s weakening to the lowest in four years is also boosting Japanese electronics makers’ earnings from overseas.
Currency Assumptions
Panasonic’s forecast is based on an exchange rate of ¥85 to the US dollar. That compares with Sony’s assumption of ¥90, while the Japanese currency traded at more than ¥101 on Friday.
Samsung, Asia’s largest electronics maker, last month reported record quarterly profit as its smartphone sales surged. Net income jumped 42% to 7.15 trillion won ($6.5 billion) in the three months ended 31 March, Samsung said on 26 April.
Panasonic’s long-term credit rating was cut to one level above junk by Moody’s Investors Service, which cited challenging market conditions, in November.
The company is considering selling a stake in its healthcare unit, it said in March. The electronics maker also said it agreed to sell a majority stake in its logistics unit as early as in July to Nippon Express Co. Bloomberg
Grace Huang in Tokyo contributed to this story.
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