Panasonic Corp expects a final blast of restructuring to help it to its third straight year of profit, with growth depending on higher-margin industrial products such as car batteries.
Continue Reading Below
The Japanese electronics conglomerate has been withdrawing from loss-booking operations as it trains its attention more to serving businesses than consumers. This year, the company quit plasma TV production, pulled out of consumer smartphones and sold off some of its domestic chip factories.
At the same time, Panasonic has found favor in green technology with its 'eco-solutions' business and as a supplier of lithium batteries to electric car maker Tesla Motor Inc.
For the year ending next March, Panasonic forecast a 1.6 percent rise in operating profit to 310 billion yen ($3.04 billion), just short of the 325.6 billion yen mean estimate of 20 analyst polled by Thomson Reuters StarMine.
The growth rate pales in comparison to the 90 percent of last year, when demand for electronic goods and housing-related fixtures surged ahead of a rise in the consumption tax effective April 1.
This year will also see Panasonic spending 90 billion yen on restructuring, following last year's 207.4 billion yen, Chief Executive Kazuhiro Tsuga said at an earnings briefing.
Continue Reading Below
Panasonic booked operating profit of 305.1 billion yen for the year ended on March 31, beating guidance of 270 billion yen as well as the 292.02 billion yen mean estimate of 20 analysts polled by Thomson Reuters I/B/E/S. It also returned to net profit for the first time in three years.
"It was a better start than we expected for the first year of our (two-year) mid-term plan," Tsuga said.
Shares of Panasonic closed down 0.7 percent before the results versus a 1.0 percent fall in the broader market.
CEO Tsuga said the company took necessary steps to focus on profit over sales: Without a 625.1 billion yen boost from a weaker yen in the just-ended year, revenue would have fallen 3 percent rather than rising 5.9 percent to 7.7 trillion yen.
While the softer yen also bumped up operating profit by 20 billion yen, it was a push for customers that tripled profit in its auto and industrial component business to 85.7 billion yen. Panasonic forecasts the segment to grow 24.8 percent this year.
By contrast, Panasonic's former mainstay and best-known consumer products such as TVs, DVD players and audio systems accounted for just 7 percent of operating profit last fiscal year, whereas its 'eco solutions' division, which makes energy-saving light fixtures and other household fittings contributed 31 percent.
The company is set to continue its rebalancing towards selling to businesses rather than consumers, with a five-year plan unveiled last month targeting a near doubling of sales to the auto sector, a 50 percent rise in the housing sector and a one-third increase in a business-to-business arm that includes aviation, energy and logistics.