Panasonic’s Full Year Losses Estimated At US$5.5 Billion

By: EW News Desk Team   Date: 1 November 2011

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01 November 2011

Japanese electronics giant Panasonic has announced that the company is likely to post an annual net loss of 420 billion yen (US$5.5 billion) for the fiscal year ending March 2012 – with rising restructuring costs for its television and semiconductor businesses, coupled with a weak demand for its products overseas due to a strong yen, to blame for what will be its biggest annual loss in a decade.

The maker of products such as the Viera televisions and the Lumix camera told the press on Monday that the company had been forced to restructure its television unit as the deteriorating conditions of the industry meant that production levels had to be scaled back while past investments were written off.

The company also said it would be moving its procurement and logistics base to Singapore, marking the first time that any part of company's headquarters will be based outside of Japan.

“Companies round the world have been moving into flat-panel manufacturing, and that has pushed down prices and prevented us from putting our technological advantages to work,” said Panasonic president Fumio Ohtsubo, as quoted by the Financial Times.

Ohtsubo added that the company was likely to slash panel production capacity by almost half by 2013, with liquid-crystal panel production at its Mobara plant near Tokyo to be halted while plans to ship plasma-panel manufacturing equipment to Shanghai have been cancelled.

The recent surge of the yen has also seen it hard for Panasonic to keep up in sales with its Korean and Taiwanese competitors.

Panasonic’s weaker outlook came "due primarily to the sluggish overseas sales affected by ever-intensified price competition for digital products and the appreciation of the yen," said the company in a press statement.

Despite the recent currency intervention by the Japanese government, most expect the environment to remain “very tough.”

"It's extremely difficult to make new business investments in Japan now," said Panasonic Chief Financial Officer Makoto Uenoyama.

The company hopes that its restructing efforts will be able to refocus its production capabilities to more profitable areas of business. According to the Wall Street Journal, Panasonic plans to outsource its production of system large-scale integration chips to free itself from the burden of capital investment, while focusing on sensors and other relatively profitable areas of semiconductors.


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