Panasonic slashes profit forecasts to restructure
Panasonic cut its annual net profit forecast by 90 percent and announced plans to restructure, as the global financial crisis begins to hurt top Japanese electronics makers.
Panasonic, the world's No.1 plasma TV maker, said it would book about $1.4 billion in restructuring costs to respond to a downturn that has already forced rivals such as Sony and Sharp to cut their outlooks.
The new forecast, which is far below market expectations, surprised investors who had seen Panasonic as relatively well positioned to cope with the global economic slowdown thanks to an efficient production structure and diversified business portfolio.
"If Panasonic has to cut its outlook this much, it is not very difficult to guess how tough things are for other electronics makers as well," said a fund manager at a Japanese asset management firm.
Panasonic now expects its net profit to trickle in at 30 billion yen ($315 million) in the year ending in March 2009, down from its previous forecast of 310 billion yen and from a 281.88 billion yen profit a year earlier.
The new forecast falls well short of the consensus of 256 billion yen in a poll of 19 analysts by Reuters Estimates.
The company warned it may miss its target to sell 11 million flat TVs this business year, underscoring an increasingly gloomy outlook for consumer demand as Japan and other major economies sink into recession.
But Panasonic will also be hit by 60 billion yen in appraisal losses on its shareholdings and 130 billion yen in restructuring charges as it closes and sells unprofitable operations.
The company cut its operating profit forecast 39 percent to 340 billion yen for the year to March and lowered its sales outlook by 7.6 percent to 8.5 trillion yen.
The revisions were expected after a source familiar with the matter said earlier on Thursday the maker of Viera flat TVs and Lumix digital cameras was likely to cut its annual operating profit forecast by at least 30 percent.
Sony, the maker of Bravia flat TVs, Cyber-shot digital cameras and PlayStation game consoles, last month cut its operating profit forecast 57 percent to 200 billion yen for the year to March.
Sharp also lowered its profit forecasts last month, hurt by sluggish sales of mobile phones in Japan.