Panasonic Expects Almost £6 Billion Loss

on Oct 31, 2012

Today (31 October) Panasonic (TYO:6752) posted an operating profit for the Japanese second quarter, from April, of ¥48.8 billion (£381.21 million) compared with a profit of ¥42 billion (£328 million) a year ago. The figure came out lower than the average estimate of ¥55.6 billion (£434 million) from five analysts surveyed by Thomson Reuters.

The Japanese electronics maker dramatically slashed its annual forecast from a ¥50 billion (£390 million) profit to a net loss of ¥765 billion (£5.97 billion). Last year the company registered a record net loss of ¥772 billion (£6.02 billion) and for the past four years it has accumulated losses exceeding $15 billion (£9.32 billion).
“The situation is worse than we had expected earlier, and we have a severe outlook for the second half,” Chief Financial Officer Hideaki Kawai told reporters. “Digital consumer businesses such as TV, cameras, Blu-ray disc players and PCs worsened faster than we had expected three months ago.”

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Quarterly sales fell 12 percent to ¥1.82 trillion (£14.2 billion) as a result of the global slowdown, competition from cheaper Asian makers and falling price of electronics. In Japan sales plunged 11 percent, while overseas they dipped 14 percent.
!m[The Japanese Company Scales Back Substantially After Struggling Against Competitors](/uploads/story/683/thumbs/pic1_inline.png)Kazuhiro Tsuga, Panasonic’s new CEO, has decided to write off the goodwill and add to restructuring costs in an attempt to clean up all loss-making divisions as part of a new revival plan. A total of ¥238 billion (£1.86 billion) in goodwill related to the company’s mobile phone unit and solar panels’ business will be written off. According to Reuters, Mr Tsuga intends to halt Panasonic sales of smartphones in Europe after returning to the market this year.

In the first half of the year the company dismissed 38,387 employees but still remains Japans largest corporate employer with 321,896 workers. Mr Kawai said Panasonic will not be shedding any more positions but may have to sell some of its real-estate assets to generate cash. Cash and cash equivalents fell to ¥443.9 billion (£3.47 billion) as of the end of the second quarter from ¥574.4 billion (£4.47 billion) in March.
Shares of the company rose 4.5 percent to ¥514 in Wednesday’s trading session before the profit-slashing announcement, reducing the year-to-date stock price decline to 21 percent.


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