Panasonic to 'clean house'
Panasonic said it will lose almost $10 billion (€7.69 billion) this business year as it cleans house of poorly performing operations, writing down billions of dollars of goodwill and assets in its mobile and energy units while its new boss readies for a fresh bout of restructuring.
Panasonic, founded in 1918, is heading for a fourth net loss in five years after forecasting a 765 billion yen ($9.6 billion) loss for the year to March, nearly matching last year's record net loss of 772 billion yen. The result would boost its cumulative loss over five years to nearly $25 billion.
Kazuhiro Tsuga, who became Panasonic's president this year, has promised a harsh revamp, to be unveiled by next March, that is expected to beat a path away from money-losing TVs and other consumer electronics.
"It's unfortunate, but we are among the losers in consumer electronics," he told a news conference.
Panasonic's Japanese peers Sharp and Sony have also struggled with heavy losses in TVs and other mainstay electronics goods as more nimble, better-funded rivals - especially South Korea's Samsung - take over turf they once dominated.
But Panasonic's multibillion-dollar write offs, including deferred tax assets, are a sign that Mr Tsuga is already scaling back businesses that do not add to the bottom line as a weak global economy takes its toll.
"We believe we have removed everything that posed a writedown risk," Panasonic's chief financial officer Hideaki Kawai said.
Even after a 36,000 reduction in its workforce last year, Panasonic remains Japan's largest corporate employer with 330,000 workers.
The maker of Viera TVs, which had been projecting 50 billion yen in net profit in the year to next March, also cut its annual operating profit target to 140 billion yen from 260 billion yen.
Its projection for annual TV sales was trimmed to 13 million sets from 15.5 million.
The size of this year's loss may come as a shock to some investors, but analysts have long argued that the company needed drastic reforms that break Japan's corporate traditions if it is to secure its future.
"There's a strong possibility of some initial panic selling (of the stock)," said Kabu.com Securities market analyst Tsutomu Yamada. "What happens to the price after that will depend on the substance of its structural reforms."
Since the start of the year, Panasonic's shares have dropped more than 20 per cent, compared with a more than 5 per cent gain in the benchmark Nikkei 225.
Panasonic shares rose 4.5 per cent today to close at 514 yen before it released its results for the quarter.
In the three months to September 30th, Panasonic posted an operating profit of 48.8 billion yen (€473.2 million) compared with a profit of 42 billion yen (€406 million) a year ago.
The result was lower than the average 55.6 billion yen profit estimate from analysts surveyed by Thomson Reuters.