Bloomberg News

Panasonic Forecasts Biggest Loss in Decade on Strong Yen, TV

October 31, 2011

Oct. 31 (Bloomberg) -- Panasonic Corp., the maker of Viera televisions, forecast its biggest annual loss in 10 years because of a stronger yen, declining sales and a one-time charge for restructuring its TV and chip operations.

The full-year loss may be 420 billion yen ($5.4 billion), the Osaka-based electronics maker said in a statement today, reversing an earlier projection for profit of 30 billion yen in the 12 months ending March 31. That includes a charge of 404 billion yen for streamlining the TV and semiconductor businesses, according to the statement.

Japan’s biggest maker of appliances cut its annual TV sales target to 19 million from 25 million amid competition from South Korea’s Samsung Electronics Co. and LG Electronics Inc. The yen reaching a postwar high against the dollar and a decade high against the euro is pressuring the company to accelerate plans to eliminate 17,000 jobs and focus on solar panels and rechargeable batteries after acquiring Sanyo Electric Co.

“Panasonic is having a really hard time because the company has to work on two restructuring plans at the same time,” said Koji Toda, chief fund manager at Resona Bank Ltd. in Tokyo. “One is Sanyo and another one is downsizing the TV department.”

Panasonic declined 7.4 percent to 7.15 euros in Frankfurt trading after the announcement. The shares in Tokyo have declined 30 percent this year, compared with a 2 percent advance for Samsung and a 43 percent drop for Sony Corp.

Yen Appreciation

For the three months ended Sept. 30, Panasonic reported a net loss of 106 billion yen, compared with the 5.6 billion yen average profit of four analysts’ estimates compiled by Bloomberg.

Japan’s currency today dropped from a post-World War II record against the dollar after the country intervened in the currency markets. A stronger yen hurts the repatriated value of sales overseas.

Separately, Panasonic announced a reform plan for its TV and chip operations. The company is suspending two Japanese plants making TV displays, scrapping plans to relocate panel facilities to China and writing off some value of plants making TV displays and semiconductors.

The company also will reduce its production capacity for plasma TV panels by 48 percent.

“We’ve sought measures to solve deficits at the TV unit since 2008 but none brought a result that we anticipated,” President Fumio Ohtsubo told reporters in Tokyo.

Buying Sanyo

The company also will shift its procurement base to Singapore from Osaka, it said.

The maker of Viera TV was affected by floods in Thailand just months after restarting domestic plants crippled by Japan’s magnitude-9 temblor on March 11.

Panasonic, which spent more than $6 billion purchasing stakes in Sanyo and Panasonic Electric Works Co. last year, wants energy-related businesses to be its next earnings driver after its TV operation recorded three consecutive annual losses.

Panasonic will speed up its plan to reduce group employment to a maximum of 350,000, the company said in a statement today. It also aims to make a profit from its TV and chips businesses next fiscal year, Ohtsubo said.

Income at the main audio-visual unit likely will total 36 billion yen this fiscal year, while profit at the home-appliance unit may be 104 billion yen, the company said without providing year-earlier numbers.

The Sanyo Electric unit may record a loss of 69 billion yen, it said.

Panasonic is eliminating overlapping operations in white goods and car navigation systems, consolidating marketing and research units and cutting its number of plants by as much as 20 percent from about 350, Ohtsubo said in April.

--Editors: Anand Krishnamoorthy, Michael Tighe

To contact the reporter on this story: Mariko Yasu in Tokyo at

To contact the editor responsible for this story: Michael Tighe at

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