Struggling electronics maker Panasonic Corp. is aiming to shed around 10,000 more jobs, mostly overseas, including 8,000 workers who will be let go in the second half of the fiscal year to next March, sources said.
The majority of jobs to be eliminated is thought to consist of staff recruited locally as Panasonic consolidates some operations conducted by its subsidiary, Sanyo Electric Co., in China and other overseas markets, according to the sources.
Costs for these workforce reduction steps have already been factored into the company’s earnings estimate for the year through March, the sources added.
Hit hard by slumping TV sales in Japan and notebook PCs worldwide, Panasonic, the maker of Viera TVs and Lumix cameras, announced Oct. 31 it is anticipating a ¥765 billion group net loss in the current fiscal year.
The Osaka-based company has eliminated almost 39,000 jobs in the past year, or about 11 percent of its workforce, as domestic electronics makers struggle amid competition from overseas rivals including Samsung Electronics Co. The firm has also started pulling out of money-losing businesses, including mobile phone operations in Europe.
The manufacturer’s stock price this month plunged to the lowest level in at least 38 years, and Moody’s Investors Service said it will review its debt for a potential downgrade after Japan’s third-biggest employer predicted a loss this fiscal year.
“They have no choice but to cut more jobs, given the enormous loss” forecast for fiscal 2012, said Yoshihiro Okumura, general manager at Chiba-Gin Asset Management Co. “Further job cuts were expected. What is more important going forward is to realign its businesses and show investors a clear picture for revival.”
The loss projection, released last month, was 30 times higher than analysts had estimated and will likely prompt Panasonic to skip paying a dividend for the first time since 1950 because of an “urgent need” to improve its financial position. It would be the company’s second straight year in the red.
Still, “it’s positive that the company is promoting reform at a faster pace than the market expected,” said Kazuharu Miura, an analyst at SMBC Nikko Securities Inc.
Panasonic and its smaller rival, Sharp Corp., are among a number of domestic consumer electronics makers that have failed to come up with hit products to challenge Samsung and Apple Inc. Both Sony Corp. and Panasonic’s value have slipped to near three-decade lows as investors remain unconvinced that Japan’s TV manufacturers can rebound from slumping demand, plummeting prices and mounting losses.
Panasonic reported the bulk of its projected loss for the year through March 31 will come from ¥440 billion in restructuring expenses, more than 10 times greater than the company earlier estimated, including a writedown of goodwill on such businesses as solar, lithium-ion batteries and cellphones.
“The situation is worse than we had expected, and we have a severe outlook for the second half” of the fiscal year, Chief Financial Officer Hideaki Kawai said at an Oct. 31 briefing in which he also stated that Panasonic had no plans to cut jobs in significant numbers.
With 321,896 workers on its payroll as of Sept. 30, Panasonic only trails Toyota Motor Corp.’s 328,762 employees as of June 30 and Hitachi Ltd.’s 327,325 as of Sept. 30 among the country’s largest employers, according to data compiled by Bloomberg.
On Nov. 1, Moody’s placed Panasonic’s Baa1 long-term senior unsecured bond and issuer ratings, as well as its shelf registration, on review for a downgrade. Japan Rating and Investment Information Inc. also announced it has placed Panasonic on its monitoring list and may downgrade the firm’s current A+ rating by more than one level.
Panasonic promoted Kazuhiro Tsuga to president in June after the 56-year-old executive led the restructuring of its unprofitable TV business.
Losses from its television operations totaled ¥349 billion in the past four fiscal years, according to an estimate by Yuji Fujimori, an analyst at Barclays PLC in Tokyo. Sony’s TV business is in even more dire straits, as it is forecast to lose money for a ninth consecutive year.
Global demand for TVs is expected to remain little changed in 2013 after shipments of all types of televisions declined more than 4 percent this year, research firm DisplaySearch said last month. Deliveries in Japan plunged 77 percent in the second quarter.
Anti-Japanese sentiment in China may lead to a ¥100 billion plunge in sales and a ¥30 billion dip in operating profit this year, Panasonic’s Kawai announced last month.
Protests from mid-September after Japan nationalized the disputed Senkaku Islands disrupted operations at Panasonic’s three factories in China, where the company generated around 14 percent of its sales in the first quarter.
The bitter clash over the East China Sea islets, which are administered by Japan but claimed by China, sparked a wave of anti-Japanese sentiment, halting output at Chinese plants operated by Japanese manufacturers and reducing demand for their products in the world’s second-largest economy.
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