TOKYO/SEOUL Jan 9 (Reuters) - Japanese electronics maker Panasonic Corp (6752.T) will cut its investment in two new flat-screen TV plants by about $1.5 billion and exit unprofitable businesses as the global economic slump slices into its profits.
But the world's largest plasma TV maker said it also aims to boost its flat TV unit sales by 50 percent next business year to cement its position, though rivals such as No. 2 Samsung Electronics Co (005930.KS) and third-ranked LG Electronics Inc (066570.KS) are also targeting bold growth.
Weakening economies around the world have been eating into demand for flat TVs, digital cameras and other electronics products, with Hitachi Ltd (6501.T) -- Japan's top electronics maker -- expecting to miss its LCD TV sales target by as much as 10 percent in 2008/09. [ID:nN08200013]
Panasonic, which changed its name from Matsushita Electric last year, had said in November it would need to restructure to weather a downturn that has already forced Sony Corp (6758.T) and other rivals to shutter plants and cut jobs.
The company said on Friday it would cut investment through 2012 on two flat TV plants under construction in Hyogo prefecture, near Osaka, by 135 billion yen ($1.5 billion) to 445 billion yen.
"We will aim for a bigger growth than the industry as we cope with a slowdown in the market," Panasonic president Fumio Ohtsubo told a briefing. "We will carefully follow the market trend, we hope to win the cut-throat competition.
"We will not consider the planned cut in investment as a negative move."
Panasonic aims to sell 15.5 million plasma and liquid crystal display (LCD) TVs in the year starting in April, up from estimated 10.3 million units in 2008/09 as it plans to increase line-ups and expand sales channels.
LG said it aims to raise its LCD TV sales by 50 percent to 18 million sets this year and its plasma TV sales by 7-25 percent to 3-3.5 million units. [ID:nSEO349960]
Samsung, which ranks No. 1 in LCD TVs and second in plasma TVs, targets to sell at least 26 million flat-screen TVs in 2009, according to Yonhap News. That would be a growth of 10 percent for LCD TVs and a third for plasma from last year. [ID:nSEO96022]
Research firm DisplaySearch has forecast the LCD TV market to grow 17 percent in 2009 in unit terms, slowing from a 29 percent increase in 2008.
Plasma TV growth is expected to suffer an even sharper slowdown, with total market size seen growing only 5 percent in 2009 compared with a 24 percent rise in 2008, DisplaySearch said.
Along with the slumping demand, margins are also under pressure with plummeting TV prices as makers and retailers try to clear piling inventories.
In November, Panasonic cut its annual net profit forecast by 90 percent and said it would book 130 billion yen in additional restructuring costs for the year to March. It also warned on Friday it would be hard to reach all of its targets under its mid-term plan.
It had aimed for a 10 trillion yen revenue, a 10 percent return on equity, and a reduction of 300,000 tonnes carbon dioxide in 2009/10.
Panasonic also said it may withdraw from businesses that have lost money since the financial year ended March 2007, including operations of Sanyo Electric 6764.T, a smaller rival it is set to acquire this year for up to $9 billion.
It aims that the Sanyo buy would boost annual operating profit by 80 billion yen in 2012/13 for both companies.
"Panasonic is trying to step on both the accelerator and the brake at the same time," said Mizuho Securities analyst Ryosuke Katsura. "It is pushing hard to gain market share at the same time that it trims down, most likely by consolidating its factories around the world.
"The strategy it is mapping is one aimed at springing back to growth when the economy does recover," he said. "But that's not going to be visible any time soon."
Katsura warned that Panasonic could plunge into a net loss next business year, against a 30 billion yen profit that the company expects in 2008/09.
Analysts were also sceptical of LG's targets, which are seen aimed at outrunning Japanese rivals that are hurt by the stronger yen.
"LG's target is unrealistic under current market conditions. U.S. consumers are buying digital signal converters (for their analogue televisions) instead of new TVs, even with huge discounts," Park Sang-hyun, an analyst at HI Investment & Securities. (Additional reporting by Mayumi Negishi, Nathan Layne, and Kiyoshi Takenaka; Editing by Edwina Gibbs, John Stonestreet) ($1=91.23 Yen)