Japan’s Panasonic Corp said its quarterly earnings more than tripled, extending its renaissance as a maker of high-tech parts for cars and energy-efficient homes with few qualms about selling off legacy businesses that once dragged it into losses.
The Osaka-based electronics firm yesterday said that operating profit surged to ￥116.6 billion (US$1.15 billion) in the October-December quarter. It also signaled it is nearing the end of its long-running restructuring, striking a deal to sell microchip assembly plants in Southeast Asia to a unit of Singapore’s UTAC Holdings.
Panasonic is emerging from a period of heavy losses across Japan’s consumer electronics industry, squeezed by competition from aggressive rivals like Samsung Electronics Co. After losing US$15 billion over the previous two years, Panasonic’s reinvention of itself as a force in automaking and housebuilding, rather than TVs or smartphones, means it is forging ahead of peers like Sony Corp in the restructuring game.
“We see Panasonic emerging as a transformation champion... beyond restructuring, Panasonic looks positioned to emerge as a strong corporate leader,” Atul Goyal, an analyst at Jefferies in Singapore, wrote in a note issued to clients ahead of the earnings.
Panasonic’s quarterly operating profit was more than three times the year earlier’s ￥34.6 billion. It was close to double expectations of about ￥66.2 billion, the “SmartEstimate” or average of the most accurate analysts surveyed by Thomson Reuters I/B/E/S.
Quarterly net profit grew to ￥73.7 billion from ￥61.4 billion a year earlier.
Under president Kazuhiro Tsuga, Panasonic has been shifting away from consumer-oriented sectors and embracing business clients instead. While selling off businesses like its healthcare arm and semiconductor operations, it has been pushing through a costly restructuring in its TV operations — a move also under way at Sony, which reports earnings tomorrow.
Those efforts paid off in the three months ending December. Panasonic narrowed losses in its TV panels division to ￥8.1 billion from ￥25.5 billion a year earlier. In its semiconductors business, losses shrank to ￥5.4 billion from ￥8.2 billion.
By contrast, its automotive and industrial systems division posted ￥28.2 billion in profit, while its “eco solutions” segment, mainly household fittings and appliances, earned ￥32.1 billion. Both serve sectors that have benefited from reflationary policies and a weaker yen under Japanese Prime Minister Shinzo Abe.
The company said it had seen particularly strong sales in its auto parts division, which signed a contract with US carmaker Tesla Motors to supply nearly 2 billion cells in the four years to 2017, a big jump from the 200 million cells it is supposed to have provided over the two years to December last year.
Panasonic said it would push ahead quickly to complete its restructuring, for which it has budgeted ￥170 billion in the fiscal year ending next month.
“We will use the whole budget — we may even go over,” chief financial officer Hideaki Kawai said at a briefing in Tokyo. “We have a sense of urgency and we will bring it forward and do whatever we can this year.”
Despite the strong quarter, Panasonic did not raise its full-year earnings guidance.