Panasonic Profit Forecast Misses Estimates Amid Slump in TVs

Panasonic Corp. (6752), Japan’s biggest appliance maker that’s eliminating 17,000 jobs after posting a record loss, forecast a profit this year that missed analyst estimates as demand for its Viera plasma TVs drops.

Net income will probably be 50 billion yen ($627 million) in the 12 months ending March 31, the Osaka-based company said in a statement today. The projection missed the 106 billion-yen average of 18 analyst estimates compiled by Bloomberg. The company had a record 772 billion-yen loss last year.

Panasonic joins Sony Corp. in predicting profits that missed estimates as global TV demand falls and Japanese companies lose market share to South Korean competitors Samsung Electronics Co. and LG Electronics Inc. Panasonic, founded in 1918, is trying to transform itself into a leader in solar panels and rechargeable batteries.

The company’s earnings targets “could be difficult to achieve, given restructuring costs and sluggish TV demand,” Yasuo Nakane, a Tokyo-based analyst at Deutsche Bank AG, said before the announcement. “Targets should be realistic so that the management handover can be smooth.”

The company’s shares fell 1.6 percent to 570 yen in Tokyo trading before the earnings announcement. The stock has tumbled 13 percent this year, compared with an 18 percent drop for Sony.

TV Sales

TV sales this year will decline to 15.5 million units from 17 million units last year, Panasonic said. The company will lose money from selling TVs this year, Tetsuya Yoshimoto, a group manager at the company’s accounting unit, told reporters in Tokyo today without giving a projection.

“TV and semiconductor businesses were substantially unprofitable offsetting all profit from other profitable business,” Panasonic said in the statement about the year ended in March.

The company forecast a 60 billion-yen operating profit at the audio-visual unit and a 3 billion-yen profit at the energy unit in the year that started in April. Full-year forecasts were based on 78 yen to the dollar and 103 yen to the euro, according to the statement.

Sony, Japan’s biggest electronics exporter, yesterday forecast the company may have a 30 billion-yen net income this fiscal year, lagging behind the 61.4 billion-yen estimate of analysts. Sony also had a record loss last year.

Management Change

Global TV shipments last year fell for the first time in six years because of excessive inventory in the U.S. and Europe, and the end of Japanese government subsidies for purchases, according to DisplaySearch, part of NPD Group. Shipments fell 0.3 percent to 247.7 million units, the researcher said.

Panasonic is promoting Kazuhiro Tsuga, its 55-year-old chief of audiovisual products, to replace President Fumio Ohtsubo, 66, as the company tries to speed up reforms. Sony and Sharp Corp. are also replacing top management as they struggle to revive earnings.

Panasonic has expanded its renewable energy businesses, including solar panels and power-storage systems, since it acquired Sanyo Electric Corp. in 2008. It also merged last year with Panasonic Electric Works, which makes lighting systems and electrical-wiring fittings.

Ohtsubo said last year Panasonic will eliminate almost 17,000 jobs over two years in his second round of job cuts as part of an overhaul to revive Japan’s second-biggest employer, which makes products ranging from car TV sets and digital cameras to rice cookers and refrigerators.

The maker of Lumix cameras joined Sony in nominating a younger leader amid worsening earnings as the electronics makers struggle to turn around TV operations and cope with the stronger yen. Kazuo Hirai, 51, took over as the president and chief executive officer of Tokyo-based Sony last month, replacing Howard Stringer.

To contact the reporter on this story: Mariko Yasu in Tokyo at myasu@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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