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Tokyo (AFP) July 31, 2012
Struggling Panasonic said Tuesday it swung back into the black for the April-June quarter as it cut costs to restructure its business while battling the negative effects of a strong yen.
The consumer electronics giant, which suffered a massive loss in its last fiscal year, logged a net profit of 12.8 billion yen ($164 million), reversing a shortfall of 30.4 billion yen for the three months last year.
Sales fell 6.0 percent to 1.81 trillion yen but operating profit surged to 38.6 billion yen from 5.6 billion yen a year ago, the Osaka-based firm said.
"Despite a sales decline and yen appreciation, these results were due to mainly to fixed cost reductions and streamlining of material costs," the company said in a statement.
Panasonic also credited a jump in domestic demand following last year's quake-tsunami disasters, which hurt manufacturers' operations and dampened consumer sentiment.
"However, the home electronics market, especially flat-panel TVs, continued to be very difficult," it added.
Panasonic left unchanged its full-year forecast, projecting it would return to the black in the current fiscal year to March 2013 with a net profit of 50 billion yen.
For the previous fiscal year, Panasonic suffered a record 772.2 billion yen net loss, one of the worst-ever losses for a non-financial Japanese firm.
Panasonic shares jumped 4.59 percent to 546 yen in Tokyo trade on Tuesday, with its quarterly results published after the closing bell.
As the massive firm tries to revive its flagging fortunes, Japanese media have reported that Panasonic may halve its 7,000-strong headquarters as part of a bid to streamline its operations.
Panasonic, like its rival Sony which posted a record 456.66-billion-yen annual loss, has long suffered in its television business and its debt also soared due to the purchase of smaller rival Sanyo.
Panasonic president Fumio Ohtsubo announced he would step down following the massive losses, which sent the company's shares to 30-year lows.
Japan's electronics sector has been badly hit by the appreciation of the yen, which makes exporters' products less competitive overseas, while falling prices and slow demand at home have also eaten into profits.
Competitors including South Korea's Samsung and US-based Apple are offering stiff competition, with high resolution display technology a key battleground as demand intensifies for smartphones, tablet computers and other gadgets.
Panasonic has already announced a major restructuring of its liquid crystal display manufacturing division, and is reportedly considering shifting all of its mobile phone handset production overseas amid high costs at home.
In June, Panasonic and Sony announced they would team up to develop televisions with advanced technology, in a bid to claw back market share from overseas rivals.
Despite a long-standing rivalry, the firms said they would aim to establish mass-production technology for organic light-emitting diode (OLED) television panels next year.
Japan jobless rate down as households boost spending
But the positive data was tempered by figures on Monday that showed factory output turned down unexpectedly last month, stoking concerns that turmoil overseas is increasingly hurting the world's third-largest economy.
On Tuesday, official data showed the nation's unemployment rate hit 4.3 percent last month, down from 4.4 percent in May and beating market forecasts that Japan's jobless rate would remain unchanged, Dow Jones Newswires said.
Separate data from the internal affairs ministry showed Japanese households boosted spending last month.
"Japan's job market continued to improve in line with a gradual recovery of the nation's entire economy," said Naoko Ogata, a senior economist at Japan Research Institute.
The job market improvement was partly due to growing demand for jobs in northeastern Japan, where reconstruction was in full swing following last year's quake-tsunami disaster, analysts said.
Average household spending in June came in at 269,810 yen ($3,450), up 1.6 percent from a year earlier, but lower than the 2.9 percent rise forecast by economists.
"All in all, the Japanese economy is still on course to recovery, led by improvement in domestic consumption," Ogata said.
"But an end to auto incentives later this year may dampen consumers' sentiment," she added, referring to temporary government subsidies for eco-friendly cars.
Ogata also said a strong yen was a negative for Japan's economy as it makes exporters products pricier overseas while shrinking the value of firms' foreign earnings.
Many Japanese firms have blamed weaker quarterly earnings on huge foreign-exchange losses.
On Monday, data showed Japan's factory output was down 0.1 percent in June, well short of market expectations for a 1.6 percent rise.
The output decline came amid growing fears about the fiscal situation in Europe -- a major market for Japanese products -- and the strong yen hurting demand.
Japanese industry is also facing major challenges after the country shut down its nuclear reactors in the wake of last year's atomic crisis, with industrial users being asked to make deep cuts in energy consumption.
All 50 of Japan's nuclear power stations were switched off after the March 11 tsunami, which swamped reactors at the Fukushima Daiichi plant and sent them into meltdown.
Despite widespread anti-nuclear sentiment the government later approved a plan to restart two reactors, which have now come online.
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