Panasonic says FY profit target unchanged despite earnings drop

JAPANESE electronics giant Panasonic said Tuesday it was still on track to book a $1.19 billion annual profit, despite a drop in nine-month earnings due to one-time gains a year earlier.

The Osaka-based company’s earnings for the April-December period came to 140.4 billion yen, down 42 percent from a year earlier, while revenue ticked up 1.0 percent to 5.7 trillion yen.

But it said it still expects to post a 140 billion yen profit in the fiscal year to March, pointing to strength in its energy and auto units, while a sharp drop in the yen also provided strong support.

“Sales of solar panels for homes continued to be stable in Japan, and demand (in the) automotive-related business steadily increased in its global market,” the firm said in a statement.

“Yen depreciation also contributed to the overseas sales increase.”

After posting record losses, Panasonic along with rivals Sony and Sharp have launched painful restructuring as falling prices in the television business weighed on their bottom line.

As it moves away from consumer products, Panasonic is pulling the plug on its last remaining TV manufacturing factory in China and will reportedly sell its plant in Mexico owing to a sharp decline in television prices — its TV business has lost money over the last six years.

It has also signed a deal with US electric carmaker Tesla to build a huge battery-making plant in the United States.

The company’s shares rose 0.74 percent to close at 1,357.5 yen in Tokyo on Tuesday, before the results were published.

– Business-to-business –

Rival Sony is expected to publish partial results on Wednesday — it is expecting a whopping 230 billion yen loss in the fiscal year to March, more than four times its earlier forecast.

The company previously announced it would delay the release of its full quarterly earnings report, after a cyberattack linked to North Korea satire “The Interview” damaged the computer network at its Hollywood film unit.

Earlier in the day, Sharp warned it will book a 30 billion yen shortfall in the current fiscal year, after earlier predicting a profit of the same amount. It cited weakness in its TV unit and screens that it makes for smartphones and tablets.

“All in all, Japan’s major electronics companies are benefiting from the impact of a weak yen, but there has been a gradual division between the recovering firms and those that are still struggling,” said Mito Securities analyst Keita Wakabayashi.

“Panasonic is now doing better due to its restructuring and growing profits from business-to-business deals. It’s also concentrating on its strongest units, such as the housing and automotive-related markets.”

Still, a sales tax increase in Japan last year — the country’s first in 17 years — hurt consumer demand and damaged sales of household appliances, where Panasonic is a major player.

“Much of Panasonic’s white goods and housing-related businesses are aimed at Japan, where consumer demand has yet to recover from the tax increase,” Nomura analyst Yu Okazaki told Bloomberg News.