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Panasonic profit beats analyst estimates

Bloomberg

Panasonic Corp. posted third-quarter profit that beat analysts’ estimates as the television maker stops making plasma sets to speed up reforms and recover from back-to-back annual losses.

Net income rose 20 percent to ¥73.7 billion in the three months that ended Dec. 31, the Osaka-based company said in a statement Tuesday. That beat the ¥44 billion average estimate of three analysts surveyed by Bloomberg News.

Operating profit more than tripled to ¥116.6 billion in the quarter, on a 10 percent increase in sales to about ¥2 trillion. The company kept unchanged its forecasts of annual net income at ¥100 billion.

President Kazuhiro Tsuga, in his second year at the helm, suspended plasma panel production, trimmed smartphone and circuit board operations and sold a stake in chip factories to Israel’s Tower Semiconductor Ltd. to focus on growing businesses.

Panasonic gained 53 percent in the past 12 months, outperforming the 5 percent advance by competitor Sony Corp., as Tsuga moves away from unprofitable consumer businesses to focus more on meeting demand from automakers and homebuilders.

“Tsuga is doing what needs to be done to work out a reform at such a big corporation,” Yasuo Nakane, an analyst at Deutsche Bank AG, said before the announcement. “He’s paying close attention to cash-flow being generated at each business to make calls himself. The contribution of that has been significant.”

Panasonic’s long-term credit rating was raised to BB+, one level below investment grade, last month by Fitch Ratings, which cited recovering profitability due to “extensive restructuring measures, particularly in the unprofitable TV and smartphone business.”

The company eliminated 32,000 jobs as of September from a year earlier. Tsuga, who took control in June 2012, said he plans to eliminate unprofitable divisions by March 2016.

Panasonic is in talks with automotive parts makers for possible acquisitions or alliances as the company seeks to expand the components it delivers to vehicle manufacturers.