Panasonic Corp. has lowered its full-year group earnings forecast for the current business year through next March, citing factors such as a stronger yen and a slump in solar business.
For fiscal 2016, the Osaka-based electronics maker said Monday it now expects an operating profit of ¥245 billion, down from ¥310 billion projected in April, on sales of ¥7.2 trillion, down from its earlier estimate of ¥7.6 trillion.
Group net profit is estimated to stand at ¥120 billion, compared with ¥145 billion from the previous projection.
A strong yen typically hurts exporters’ earnings as it can make Japanese products relatively expensive abroad and cuts the value of overseas revenues in yen terms.
Panasonic said every ¥1 of appreciation against other currencies, including the dollar, euro and yuan, has a negative impact of ¥32 billion on its profit.
“We can’t run our business without the premise that exchange rates fluctuate,” President Kazuhiro Tsuga told a news conference in Tokyo.
He said the company will work out a strategy based on the assumption that the dollar will move between ¥100 and ¥110 in the medium and long term.
In addition to the yen’s appreciation, the manufacturer attributed the downward revision to an anticipated decline in profit from residential solar photovoltaic systems as well as its information and communications technology business.
In the first half of fiscal 2016 through Sept. 30, Panasonic’s group net profit rose 7.7 percent to ¥119.9 billion, but its operating profit declined 27.8 percent to ¥144.63 billion, on sales of ¥3.5 trillion, down 7 percent from a year before.
Despite solid sales of home appliances, Panasonic said its domestic sales were hit by the sluggish performance of its solar power generation systems.
Solid sales at newly acquired U.S. refrigeration firm Hussmann Corp. as well as of home appliances in Asian markets were undermined by the negative impact of the higher yen.
Regarding its full-year outlook, Panasonic did not provide year-on-year percentage comparisons as it has changed its earnings reporting standards to International Financial Reporting Standards from the generally accepted U.S. accounting principles, known as U.S. GAAP.
In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.