Panasonic Corp. said Monday it reported a 19 percent drop in third-quarter operating profit and cut its full-year earnings outlook, citing slower demand for home appliances and factory automation equipment in China amid an escalating Sino-U.S. trade war.
The electronics company posted an operating profit of ¥97.6 billion for the October-December quarter, down from ¥120.1 billion a year ago. That was far below the average ¥122.35 billion estimate of eight analysts, according to Refinitiv data.
Panasonic cut its operating profit forecast for the year ending in March to ¥385 billion from ¥425 billion. The outlook compared with the ¥420.25 billion average of 18 analyst estimates, according to Refinitiv data.
The company said its automotive business will likely post weaker sales in China, where car sales last year slipped 2.8 percent to 28.08 million units, the first contraction in 28 years.
It also said sales of its home appliances, such as air conditioners, have fallen in China and other Asian markets.
A bright spot amid the otherwise bleak earnings is that Panasonic’s energy division, which includes the battery business with U.S. electric car maker Tesla Inc., posted an operating profit of ¥16.5 billion, its first profit in three quarters.
Panasonic, the exclusive battery cell supplier for Tesla’s current production models, saw its profits squeezed early last year by the U.S. firm’s initial production delays for the mass-market Model 3 sedan.
While Tesla CEO Elon Musk has said he sees higher demand for the Model 3, analysts are now concerned demand in the United States for both the midrange and long-range versions has largely been exhausted.
Tesla expressed optimism last month that it would post profits in every quarter in 2019, but the winding down of a U.S. tax subsidy this year will make all Tesla cars more expensive and could hurt sales.