Panasonic cautious on US, Europe holiday sales

Panasonic cautious on US, Europe holiday sales

Tokyo: Consumer electronics maker Panasonic Corp said on Friday it sees no strong recovery in year-end sales in North America and Europe, but expects to pull its loss-making TV unit into the black in the January-March quarter.

Panasonic’s president, Fumio Ohtsubo, also told Reuters in an interview he expected some restructuring costs from its takeover of subsidiary Sanyo Electric to arise in the financial year starting in April, as the company shifts focus for a big push into environmental technologies.

“We don’t have detailed figures as yet, but based on quick reports from America and Europe, there is no strong recovery in consumption," Ohtsubo said of sales in the vital year-end shopping period.

“They are within the expectations we had at the beginning of the year-end period and roughly in line with last year, or slightly above," he said.

One analyst said any increase on last year’s sales would be seen favourably, given economic uncertainty in developed markets.

“If they manage to beat last year’s sales, that gives a pretty good impression," said Mizuho Investors Securities analyst Nobuo Kurahashi. “The television market in particular has not been good in the United States."

Ohtsubo said he expected Panasonic’s TV business to return to profit in the January-March period, partly thanks to the launch of a new model in February, though he expects the unit to post its third consecutive annual loss for the year to March.

The unit’s ability to make a profit for the September to March period would depend on year-end sales, he said.

For the year to March 2012, the maker of Viera TVs and Lumix cameras is aiming to turn a profit on televisions, despite fierce competition that is expected to trigger a more than 10% fall in 3D TV prices, he said.

“In fiscal 2011 we will more or less have completed a system where panels are made in Japan, modules in various parts of the world and final assembly takes place close to the point of consumption," Ohtsubo said.

Panasonic, which competes with the likes of Samsung Electronics in televisions, posted a 74% rise in profit for the July-September quarter.

But it kept its full-year forecast unchanged on concerns about the strength of the yen, which has eroded overseas revenue for Panasonic and other Japanese exporters. Panasonic relies on foreign markets for about half its sales.

Free trade

Ohtsubo called on the government to forge free trade deals to combat what he said were disadvantages faced by Japanese manufacturers.

“Compared with South Korea, we are in a worse position in terms of corporate taxes, exchange rates and incentives for capital investment and research and development," he said.

“If we are also behind in sealing trade deals, Japan’s manufacturers will be hit from all sides, because we have to compete on a global basis."

He said there was no change now to Panasonic’s midterm targets of ¥10 trillion in sales and 55 operating profit margin in the year to March 2013, but said they might be revised next year.

Shares of Panasonic have fallen about 17% since the start of the financial year in April, underperforming a roughly 9% drop in the Nikkei average. Panasonic fell 0.8% to ¥1,185 on Friday.

Panasonic’s takeover of Sanyo, aimed at enabling the firm to leap ahead of rivals in environmental technologies such as solar panels and rechargeable batteries, is scheduled to be completed by the end of March.

Ohtsubo said the process was going smoothly and reiterated a target of withdrawing from overlapping or non-core businesses to a total of 300 billion yen in sales. Sanyo has already shed its loss-making semiconductor and mini precision motor businesses.

“A lot of companies are going into environmental technology," said Mizuho’s Kurahashi. “But rechargeable batteries are not easy to manufacture and at this point it seems like a sector with a big future in which they are already a major player, so I think we can have good expectations."