Panasonic Forecast Misses Estimates as Tax Weakens Demand

Panasonic Corp. (6752) forecast full-year profit 14 percent below analysts’ estimates as Japanese consumers reduce purchases of electronics and housing-related products after a sales-tax increase.

Net income will rise 16 percent to 140 billion yen ($1.4 billion) in the year started April 1, the Osaka-based consumer electronics company said in a statement today. The projection compares with the 163 billion yen average of 19 analyst estimates compiled by Bloomberg.

Japanese consumers flocked to make purchases ahead of the sales tax increase in April, shifting revenue into the fourth quarter and crimping the start of the new financial year. President Kazuhiro Tsuga, appointed in June 2012, is cutting costs and focusing on meeting demand from automakers including Tesla Motors Inc. (TSLA) for batteries after posting the company’s first annual profit in three years.

“The concerns they will fall into a crisis have receded significantly,” said Yoshihiro Nakatani, a Tokyo-based senior fund manager at Asahi Life Asset Management Co. “They’ve cut loss-making businesses.”

Shares of Panasonic fell 0.7 percent to 1,120 yen at the close of trade before the earnings were announced. The stock has dropped 8.5 percent this year, compared with an 11 percent decline in the benchmark Topix index.

Photographer: Yuriko Nakao/Bloomberg

A worker dismantles a Panasonic Corp. television for recycling at the Panasonic Eco Technology Center Co. (PETEC) plant in Kato, Hyogo Prefecture. Panasonic said today it’s targeting sales of 7.75 trillion yen and operating profit of 310 billion yen in current fiscal year, unchanged from the forecasts it gave on March 27. Close

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Photographer: Yuriko Nakao/Bloomberg

A worker dismantles a Panasonic Corp. television for recycling at the Panasonic Eco Technology Center Co. (PETEC) plant in Kato, Hyogo Prefecture. Panasonic said today it’s targeting sales of 7.75 trillion yen and operating profit of 310 billion yen in current fiscal year, unchanged from the forecasts it gave on March 27.

Panasonic posted a net loss of 122.6 billion yen in the three months ended March 31 as the company took restructuring charges.

Business Restructuring

Panasonic today forecast sales of 7.75 trillion yen and operating profit of 310 billion yen in the current fiscal year, unchanged from forecasts it gave on March 27. The company plans to boost sales to 10 trillion yen by the 2018 fiscal year, Tsuga said last month.

Operating profit for the 12 months ended March was 305 billion yen. That beat the 291 billion yen average of 19 analyst estimates.

Earnings at the automotive and industrial systems unit, Panasonic’s biggest by sales, almost tripled to 85.7 billion yen from 29.5 billion yen a year earlier. The company is getting more orders for its automotive business than it had expected, Tsuga said during a briefing with reporters today.

Income at AVC networks, the business that makes camcorders and televisions, more than doubled to 21.5 billion yen.

Annual operating profit from appliances fell 22 percent to 28.5 billion yen.

“There was last-minute demand before the Japan sales-tax hike for home appliances,” said Yoshihiro Okumura, a general manager at Chiba-Gin Asset Management Co. in Tokyo. “In terms of restructuring there was a satisfactory improvement.”

Asset Sales

Tsuga has suspended plasma panel production, trimmed smartphone and circuit-board operations, and sold chip factories to Israel’s Tower Semiconductor Ltd. last year.

Panasonic is seeking acquisitions and partnerships related to its housing and automotive businesses, the company said in October. Chief Financial Officer Hideaki Kawai said in November the company can afford a deal worth 100 billion yen, he said.

It acquired a Turkey-based wiring company last year for about $460 million.

The Japanese electronics manufacturer extended a contract with Tesla to supply 2 billion cells of lithium-ion batteries through 2017. The electric carmaker may partner with Panasonic for a “gigafactory,” Tesla Chief Executive Officer Elon Musk has said.

Panasonic has cut about 73,000 jobs since 2011. The company also expected to book 75 billion yen in profit last fiscal year from selling its health-care unit to KKR & Co.

To contact the reporters on this story: Marco Lui in Tokyo at mlui11@bloomberg.net; Grace Huang in Tokyo at xhuang66@bloomberg.net; Takashi Amano in Tokyo at tamano6@bloomberg.net

To contact the editors responsible for this story: Michael Tighe at mtighe4@bloomberg.net Aaron Clark, Ville Heiskanen

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