Matsushita Electric Industrial Co, the biggest consumer electronics maker, will probably post a loss in the first quarter because of a slump in demand for mobile phones and electronic parts.
The maker of Panasonic brand products may have made a ?15 billion (US$121 million) loss in the three months ended June 30, compared with ?9.4 billion net income in the year-ago period, according to the average estimate of five analysts surveyed by Bloomberg news. Sales probably fell 4.5 percent to ?1.7 trillion.
The company will release quarterly results today at 4pm Japan time.
Sluggish sales of consumer electronics and parts used in them have eroded the Osaka-based company's earnings, which makes a diverse range of products from mobile phones, DVD players and flat- panel displays to semiconductors. To cut costs, Matsushita should give up making some unprofitable products, analysts said.
"Matsushita shouldn't try to produce everything in-house," said Kazuharu Miura, an analyst at Daiwa Institute of Research Ltd, who rates the shares "outperform."
"The company should terminate production of some components in Japan, or at least shift it overseas." Matsushita Communication Industrial Co, Matsushita Electric's mobile phone-making unit, last Wednesday posted a loss of ?4.5 billion in the first quarter and lowered its earnings forecast for the first half of the fiscal year to March 31. The unit accounted for 11 percent of Matsushita Electric's group revenue in the year ended last March.
Electrical components, which include semiconductors, liquid crystal displays and other parts used in electronic products, accounted for 21 percent of revenue in the last fiscal year.
Matsushita Electric shares have fallen 39 percent since the beginning of this year, worse than the 25 percent decline of the Topix Electric Appliances Index.
To cushion its sagging earnings, Matsushita Electric is likely to announce an early retirement plan for five group companies including the parent to cut costs yesterday, analysts said. The company said earlier this month that it's close to agreement with company labor unions on the plan.
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