Feed: Business Yahoo UK
Posted on: Friday, May 10, 2013 14:55
Author: Business Yahoo UK
Subject: Panasonic Hit By £4.85bn Full-Year Loss
Japanese electronics giant Panasonic has announced a move away from consumer gadgets, after its full-year net loss to the end of March reached £4.85bn. The company cited falling demand but pledged it would return to profit by next March. It promised the turnaround by moving from struggling operations in TVs and other consumer gadgets in favour of selling machinery, components and electronic equipment to other businesses. It said it expected a near four-fold increase in operating profit for the financial year ending in 2014. Panasonic's CEO, Kazuhiko Tsuga has promised to weed out within two years any loss-making or low-profitability units that fall short of a 5% annual operating margin threshold. Further restructuring, however, could add to costs and squeeze its bottom line. Its strategy to pull away from consumer electronics contrasts with domestic rival Sony, which is doubling down on mobile phones, cameras and game consoles. Sony's aim is to revive the fortunes of its core consumer electronics business, which still accounts for more than half of revenue. Although known as a consumer firm, TVs, DVD players and other home entertainment gadgets represent less than one-fifth of Panasonic's sales, leaving it more options to pursue profits elsewhere. Its biggest earning segments are appliances, such as washing machines and refrigerators, and the division it dubs "eco solutions", which makes light fixtures, toilets, ceiling fans and other household fittings that hark back to the company's beginnings in 1908 making electrical extension sockets. In October, Mr Tsuga bit the bullet on non-performing businesses by writing down billions of yen in tax-deferred assets and goodwill related to its businesses making mobile phones, solar panels and small lithium batteries. The result was a net loss of 754bn yen (£4.8bn) last business year, nearly matching the prior year's record 772.17bn yen (£4.95bn) loss. Like Sony, however, the company is relying on asset sales to underpin its finances as it tries to revive profit growth, pledging to keep annual free cashflow above 200bn yen. Its disposals have included a Tokyo office building and £650m worth of stocks in companies such as Toyota. The value of the company's assets fell to 5.4trn yen (£34.6bn) at the end of the latest business year from 6.6trn (£42.2bn) a year earlier, as a result of asset disposals and write-offs Over the next two years, Panasonic, which has seen its sales shrink by one-fifth from a peak of £60bn six years ago, plans to spend \$2.5bn to revamp its businesses. It has yet to announce additional staff cuts, after shedding 40,000 jobs over the past two years. With 300,000 workers it remains one of Japan's biggest employers. |
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