Tokyo: Japan’s Panasonic Corp. bounced back to a quarterly profit on cost cuts and strong flat TVs sales, but cited yen strength and tough competition in projecting a smaller-than-expected profit this year.
The maker of Viera TVs and Lumix digital cameras started production at its latest LCD and plasma panel plants in Japan this year, aiming to make the most of fast-growing demand for flat panel televisions.
The company will also be boosted by earnings from Sanyo Electric, which it took control of last year. Sanyo is the world’s top maker of rechargeable batteries, demand for which is growing strongly as a component of hybrid and electric cars.
Panasonic, the world’s No.4 flat TV maker behind Samsung Electronics, Sony Corp and LG Electronics, expects operating profit to total 250 billion yen in the year to March 2011, up 31% from a year earlier, when its profit nearly tripled.
The company’s forecast fell short of the consensus of a 276.5 billion yen profit in a poll of 20 analysts by Thomson Reuters.
Panasonic said in a statement that it believes market conditions will continue to be “unpredictable due to yen appreciation and ever-intensified global competition, despite a recovering worldwide economy.”
Under the leadership of President Fumio Ohtsubo, Panasonic spent about $4 billion for a majority stake in Sanyo, putting it in a better position to take advantage of growing demand for renewable energy-related products and services.
Sanyo, which is also a major producer of solar cells, said on Thursday its operating profit is expected to rise by a quarter in the current financial year to 40 billion yen, on a 6% jump in sales.
Panasonic’s operating profit was 60.6 billion yen in January-March, the last quarter of the previous business year, up from a 181.64 billion yen loss a year earlier.
Ahead of the results announcement, Panasonic shares closed down 2.5%, outperforming a 3.4% fall in the Tokyo stock market’s electrical machinery index. Panasonic shares have lost 1% in the year to date, while the subindex has gained 8%.