Panasonic Corporation (TYO:6752) is forecasting that their operating profit will rise 55% in the year to March 31st. The company is stepping back from their TV operations and consumer gadgets. The company will be focused primarily on machinery, components, and electronic equipment, according to Reuters.
Panasonic Corporation is expecting that their operating profit is rising 250 billion yen ($2.52 billion) for the current business year from last year’s 160.9 billion yen. Around 18 analysts surveyed by Thomson Reuters calculated an average of 241 billion yen before the company announced their latest earnings today.
Panasonic CEO Kazuhiko Tsuga said that the company is going to weed out low-profitability or loss-generating units that fall short of a 5% annual operating margin.
This strategy is different than their rival, Sony Corporation. Sony is going to double up on their mobile phones, gaming consoles, and cameras to revive their electronics businesses, which is over half of their revenues.
Panasonic’s largest earning businesses are appliances and “eco solutions” like washing machines, refrigerators, toilets, light fixtures, ceiling fans, etc.
This past October, Panasonic wrote down billions of yen for tax-deferred assets and goodwill for their mobile phone, solar panel, and small lithium batteries. The net loss from the write-down was 754.25 billion yen last year. This number was almost the same as the prior year’s 772.17 billion yen loss.
Panasonic’s assets fell to 5.4 trillion yen at the end of the last business year from 6.6 trillion one year earlier due to asset disposals and write-offs. Panasonic’s sales dropped by around one-fifth from a peak of about $92 billion six years ago. The company will be spending around $2.5 billion to revamp their products.
Panasonic dropped around 40,000 jobs over the past two years. They currently have 300,000 workers and still remains as one of the largest employers in Japan.