Panasonic Corp. said Wednesday its group operating profit fell 43.6 percent from a year earlier in the April to June quarter to ¥56.39 billion ($519 million), hit by weak sales of industrial components in China.
Net profit fell 13.2 percent to ¥49.78 billion in the first quarter of the business year ending March 2020 on sales of ¥1.89 trillion, down 5.9 percent, as the prolonged trade friction between China and the United States hurt its business in China, the Japanese electronics maker said.
Panasonic maintained its full-year earnings forecast, which factors in the negative impact of the trade dispute between the world’s two biggest economies on its sales in China.
It expects net profit to fall 29.6 percent to ¥200 billion and operating profit to decrease 27.1 percent to ¥300 billion on sales of ¥7.90 trillion, down 1.3 percent.
The Osaka-based manufacturer said demand in China for its motors, sensors and condensers fell. Sales of TVs in Europe and Asia were also sluggish, it said.
“The outlook for our operations in China remains uncertain,” Chief Financial Officer Hirokazu Umeda told a news conference in Tokyo, adding the company will be ready to respond quickly to changes in the business climate in the country.
The impact of Japan’s imposition in early July of tighter export controls on some South Korea-bound materials used in making chips and displays for security reasons is “small,” Umeda said.
Investment costs to develop automotive equipment also weighed on operating profit. Panasonic has been shifting its focus to the auto parts sector as a core business to meet growing demand for components for hybrid, plug-in hybrid and electric vehicles.
It provides batteries to U.S. electric car maker Tesla Inc. and plans to form a joint venture with Toyota Motor Corp. by the end of 2020 to manufacture and sell batteries for EVs, seeking to catch up with rival Chinese and South Korean makers.