Business / Corporate

Panasonic posts quarterly loss as pandemic hits sales hard

Kyodo

Panasonic Corp. said Thursday it incurred a net loss of ¥9.83 billion ($93 million) in the April to June quarter, its first red ink in nine years for the period, as the coronavirus pandemic dented sales in all segments, including automobile and aircraft equipment.

The loss follows a profit of ¥49.78 billion a year earlier, and stands out among electronics rivals Hitachi Ltd. and Fujitsu Ltd., which reported profit growth despite the pandemic in the same quarter.

Panasonic had a money-losing April to June quarter in 2011 shortly after the earthquake and tsunami disaster in northeastern Japan.

Sales in the first quarter of the current business year fell 26.4 percent to ¥1.39 trillion, also affected by the de-consolidation of Panasonic Homes Co., which merged with Toyota Motor Corp.’s housing business last year. Operating profit plunged 93.3 percent to ¥3.76 billion.

Panasonic said sharply reduced aircraft operations due to the pandemic depressed demand for inflight entertainment systems and other devices for the aviation industry. Overseas sales of TVs and air conditioners also dropped due to poor consumption and supply chain disruptions.

For the full year ending next March, Panasonic expects its net profit to fall 55.7 percent to ¥100 billion and operating profit to drop 48.9 percent to ¥150 billion. Sales are expected to come in at ¥6.5 trillion, down 13.2 percent.

Panasonic said the negative impact of the coronavirus pandemic is expected to gradually ease from the second half of the current fiscal year through March, but its automobile parts, building and home fixtures, and aircraft equipment businesses are expected to remain weak for the rest of the business year.

“For June, sales have returned to 91 percent of the year-earlier level, led by robust recovery in demand in China and Japan, but market situations in Europe and North America still remain severe,” Chief Financial Officer Hirokazu Umeda said in a telephone conference.

“We need to rigorously implement structural reforms to reduce fixed costs as we seek to eradicate money-losing segments” such as solar and TV operations, Umeda said. “But we will not stop investing in areas where we see fresh growth because of the pandemic,” he said, referring to domestic sales of air conditioners and computers due to the spread of remote working to reduce the risk of coronavirus infection.

On a bright side, Panasonic said it sees strong demand for the batteries it manufactures for Tesla Inc.’s electric cars at Gigafactory in Nevada, adding the possibility of boosting investment in the factory “is under discussions.”

Tesla CEO Elon Musk said last week the company would expand its business with Panasonic and other makers as it looks to secure high-quality batteries at an affordable price, with demand for its electric cars soaring.

Panasonic, meanwhile, said Thursday it will scrap its planned solar business tie-up with Chinese photovoltaic module manufacturer GS-Solar (China) Co., announced in May 2019, claiming GS-Solar failed to fulfill the requirements for an agreement.

The cooperation deal involved selling its solar manufacturing subsidiary in Malaysia, Sun Everywhere Sd. Bhd. as part of efforts to restore profitability in the solar business.

“Panasonic will take resolute measures against GS-Solar, which do not rule out taking legal action,” Umeda said. “We will look into the possibility for a new business collaboration with other partners.”

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