Thu, Jan 10, 2013 - Page 15 News List

Panasonic could close businesses, trim losses: CEO

Bloomberg

Panasonic Corp president Kazuhiro Tsuga delivers the keynote address at the opening of the 2013 International Consumer Electronics Show in Las Vegas, Nevada on Tuesday. Tsuga said the firm may have to close some of its unprofitable operations as it struggles to compete with Apple Inc and Samsung Electronics Co.

Photo: EPA

Panasonic Corp, Japan’s largest consumer electronics maker, said it is in talks about closing some businesses as the company heads toward a second straight annual loss.

Shutting divisions is a “worst-case” scenario and the TV maker will try to secure jobs if any operations are sold, president Kazuhiro Tsuga told reporters on Tuesday at the Consumer Electronics Show in Las Vegas, Nevada. He did not elaborate on which units could close.

Panasonic needs to overhaul unprofitable operations such as plasma televisions and mobile phones to end losses, Daiwa Securities Co analyst Junya Ayada said.

The Osaka-based company eliminated more than 38,800 jobs in the year ended September last year, or about 11 percent of staff, as Japanese electronics makers struggle to compete with Apple Inc and Samsung Electronics Co.

“The market is expecting Tsuga to come up with a drastic and convincing plan,” Tokyo-based Ayada said by telephone yesterday. “He needs to show specifics on how to revive the company.”

Tsuga, who is due to reveal a midterm plan by March 31, also said Panasonic is considering ventures and other options for its semiconductor business. A tie-up is the “first priority,” he said.

The TV maker has already announced plans to cut 8,000 jobs in the six months started Oct. 1 last year. It also intends to end smartphone operations in Europe by March 31 and to close domestic mobile phone plants in June.

The company’s stock was unchanged at ¥520 as of 2:29pm in Tokyo trading yesterday, while the benchmark Nikkei 225 Stock Average gained 1 percent. The stock dropped 20 percent last year, a third straight annual decline.

Panasonic may pull out of businesses with operating margins of less than 5 percent by March 2016, Tsuga said in October last year.

Among Panasonic’s seven main divisions, only the appliances unit will have an operating margin above that mark this fiscal year, based on its earnings forecast. Eco solutions has an anticipated margin of 3.5 percent, while the other units, including audio-visual, automotive and industrial devices, are expected to have margins of less than 2 percent.

To turn the company around, Tsuga needs to close plasma panel factories, shut operations making smartphones and semiconductors, and end domestic production of products including lithium-ion batteries, Goldman Sachs Group Inc analyst Takashi Watanabe said in a report in November last year.

Such reforms may require about ¥369 billion (US$4.2 billion) in restructuring expenses, he estimated.

The company has already been hit by ¥1.1 trillion of restructuring costs for its TV, solar panel, lithium-ion battery and mobile phone operations since April 1, 2010.

It also reversed its full-year profit target in October last year, forecasting a deficit 30 times bigger than analysts’ estimates because of slumping sales of TVs, handsets and personal computers.

The projected ¥765 billion loss for the year ending March 31 is the biggest loss estimate by a listed Japanese company for the period, according to data compiled by Bloomberg.

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