Panasonic sees €7 billion loss
Panasonic Corp. said it will lose almost €7 billion this business year as it cleans house of poorly performing operations, writing down billions of dollars of goodwill and assets in its mobile and energy units while its new boss readies for a fresh bout of restructuring.
Panasonic, founded in 1918, is heading for a fourth net loss in five years after forecasting yesterday a €7 billion loss for the year to March, nearly matching last year’s record net loss. The result would boost its cumulative loss over five years to nearly €19 billion.
Kazuhiro Tsuga, who became Panasonic’s president this year, has promised a harsh revamp, to be unveiled by next March, that is expected to beat a path away from money-losing TVs and other consumer electronics.
“It’s unfortunate, but we are among the losers in consumer electronics,” he told a news conference.
Panasonic’s Japanese peers Sharp Corp. and Sony Corp. have also struggled with heavy losses in TVs and other mainstay electronics goods as more nimble, better-funded rivals – especially South Korea’s Samsung Electronics Co. – take over turf they once dominated.
But Panasonic’s multibillion-dollar write offs, including deferred tax assets, are a sign that Tsuga is already scaling back businesses that do not add to the bottom line as a weak global economy takes its toll.
“We believe we have removed everything that posed a write-down risk,” Panasonic’s Chief Financial Officer Hideaki Kawai said.
Even after a 36,000 reduction in its workforce last year, Panasonic remains Japan‘s largest corporate employer with 330,000 workers.
The size of this year’s loss may come as a shock to some investors, but analysts have long argued that the company needed drastic reforms that break Japan‘s corporate traditions if it is to secure its future.
“There’s a strong possibility of some initial panic selling (of the stock),” said Kabu.com Securities market analyst Tsutomu Yamada. “What happens to the price after that will depend on the substance of its structural reforms.”