Panasonic Raises Annual Operating Profit Forecast 25%

Panasonic Corp., the world’s largest maker of plasma televisions, raised its operating profit forecast 25 percent, as cuts in fixed and material costs lead to a recovery in earnings from consumer electronics and appliances.

Operating profit, or sales minus the cost of goods sold and administrative expenses, will probably reach 150 billion yen ($1.67 billion) in the 12 months ending March 31, compared with an earlier forecast of 120 billion yen, the company said today. Sales may total 7.35 trillion yen, 5 percent more than previously projected.

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Profit at the main consumer-electronics division will probably jump 22-fold, Panasonic said, as the maker of Viera televisions joins Sony Corp. in reviving earnings after they eliminated about 50,000 jobs combined. President Fumio Ohtsubo is counting on energy-efficient products and batteries to challenge overseas rivals after acquiring Sanyo Electric Co., the world’s largest maker of rechargeable batteries.

“These companies are benefiting from the rebound in the global economy, they’ve been able to cut costs and there’s a little bit of top line growth too,” said Mitsushige Akino, who oversees about $450 million at Tokyo-based Ichiyoshi Investment Management Co. “A lot of this came as a result of cost cuts, so you can’t get too carried away.”

Panasonic fell 3.1 percent to close at 1,392 yen in Tokyo trading before the results were announced, narrowing its gain this year to 5.1 percent. Japan’s benchmark Nikkei 225 Stock Average has lost 4.6 percent this year.

Net Loss Forecast

The company kept its forecast for a full-year net loss unchanged at 140 billion yen.

Panasonic eliminated 29,155 positions in the year ended Sept. 30. The company said the effect of consolidating with Sanyo, in which it bought a controlling stake in December, contributed to the increase in sales forecast.

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Savings of 370 billion yen can probably be achieved in the 12 months ending March 31, compared with a previous target of 300 billion yen, Makoto Uenoyama, director in charge of finance, told reporters in Tokyo. The company has cut expenses by 259 billion yen and inventory by 198 billion yen this fiscal year, he said.

Third-quarter net income was 32.3 billion yen in the three months ended Dec. 31, compared with loss of 63.1 billion yen a year earlier. The estimates of six analysts in a Bloomberg News survey ranged from a loss of 34 billion yen to profit of 55 billion yen.

Fourfold Profit Increase

Sales increased to 1.89 trillion yen in the quarter from 1.88 trillion yen a year earlier. Operating profit jumped almost fourfold to 101 billion yen, the company said. The median of analyst estimates was for income of 73.6 billion yen.

Profit at the Digital AVC Networks division, the flagship unit which makes TVs, cameras, mobile phones and audio equipment, will probably jump to 70 billion yen in the year ending March 31, from 3.2 billion yen a year earlier, the company said. Sales may fall 8 percent, it said.

Panasonic sold 4.97 million flat-panel TVs in the last quarter, 48 percent up from a year earlier, and kept its annual TV sales target unchanged at 15.5 million units. TV sales were robust in all regions including Japan, China and South America, Uenoyama said.

3-D TVs

Panasonic, which introduced four 3-D plasma sets with screens ranging from 50 inches to 65 inches last month, expects to sell as many as one million 3-D TVs next fiscal year after it begins shipping in March, the company said on Jan. 8.

Profit at the Home Appliances division will probably climb 37 percent to 67 billion yen in the year to March 31, while the unit for electric works and home building may record a 15 percent decline in income.

Profit at the Components and Devices unit will likely jump almost fivefold to 34 billion yen in the year, it said.

Panasonic, which completed its 403 billion yen purchase of a controlling stake in Osaka-based Sanyo in December, plans to invest about 100 billion yen in Sanyo’s solar operations over six years. Panasonic aims to generate 3 trillion yen in annual revenue from energy businesses including solar cells and batteries for electric cars, it said Jan. 8.

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