Panasonic Doubles Forecast Amid Shift to Auto-Related Businesses

Panasonic Corp. (6752) doubled its full-year profit forecast after benefiting from a weak yen and boosting battery sales, including winning a contract to supply Tesla Motors Inc.

Net income will probably total 100 billion yen ($1 billion) in the year ending in March 2014, the Osaka-based company said in a statement today. That compares with its July projection of 50 billion yen and the 68.9 billion yen average of 15 analysts’ estimates compiled by Bloomberg.

The biggest supplier of batteries for electric cars today reported first-half operating profit rose 68 percent as President Kazuhiro Tsuga speeds up reform by halting plasma TV production, suspending some smartphone operations and partnering with KKR & Co. in its health-care business. The Japanese electronics maker’s contract to supply cells to Tesla Motors is estimated to generate $7 billion in revenue over four years.

“It’s wise now for Panasonic to keep its head down, to focus on reform while demand for its consumer goods remain sluggish,” said Masahiko Ishino, an analyst at Advanced Research Japan Co.

Panasonic today said it’s paying $460 million to buy Viko, an Istanbul, Turkey-based maker of wiring devices, miniature circuit breaker boxes, smart meters and building automation systems. The company has said it aims to boost sales from its housing-related businesses to 2 trillion yen by 2018 from 1.1 trillion for the year ended March.

Photographer: Tim Fadek/Bloomberg

A bank of Panasonic Corp.'s Viera 3D television sets sit on display during the IFA consumer electronics fair in Berlin. Close

A bank of Panasonic Corp.'s Viera 3D television sets sit on display during the IFA... Read More

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Photographer: Tim Fadek/Bloomberg

A bank of Panasonic Corp.'s Viera 3D television sets sit on display during the IFA consumer electronics fair in Berlin.

Growing Sales

“We are expecting growing sales from our automotive-related and housing-related businesses, along with the weaker yen,” Panasonic said in its earnings statement today.

The effect of a stronger dollar, which makes Japanese exports more competitive, was the most in 17 years in the three months through September, when the U.S. currency averaged 99.14 yen, 26 percent stronger than a year earlier. The yen will probably trade at 102 to the dollar in the three months through March, according to the average of analyst estimates compiled by Bloomberg.

Panasonic shares traded in Frankfurt rose 0.8 percent as of 11:45 a.m. in Frankfurt. The Tokyo-traded stock climbed 3.8 percent to close at 985 before the announcement. The stock has surged 89 percent this year, compared with a 39 percent gain for the broader Topix index.

Panasonic is considering moving workers from personal computer and mobile-phone divisions into units developing rechargeable batteries for cars and industrial uses, Megumi Kitagawa, a company spokeswoman, said by phone today.

Supplying Tesla

Another 18 billion yen will be invested in the business that makes rechargeable batteries for cars, company President Kazuhiro Tsuga said at a briefing today. That’s in addition to the 13 billion yen announced earlier this year.

The company will supply 2 billion lithium-ion battery cells to Palo Alto, California-based Tesla in the four years through 2017, Osaka-based company Panasonic said in a statement yesterday.

The contract to supply Model S and Model X vehicles may add about $7 billion in sales and cement Panasonic’s position as the largest supplier of batteries for electric cars, said Ali Izadi-Najafabadi, a Bloomberg New Energy Finance analyst.

The maker of Viera televisions today reported net income of 169 billion yen in the six months ended September, compared with a loss of 685 billion yen a year ago. Operating profit rose to 146 billion yen from 87 billion yen and sales increased 1.9 percent to 3.7 trillion yen.

Net income for the fiscal second quarter was 61.5 billion yen, compared with the 4.4 billion yen average of three analysts’ estimates compiled by Bloomberg. The profit number was derived from the half-year results.

Panasonic will end production of plasma displays by the end of the year and will exit the business by March, it said in its earnings statement.

To contact the reporters on this story: Grace Huang in Tokyo at xhuang66@bloomberg.net; 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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