CORRECTED-Panasonic sees profit rising 55 pct in shift from consumer gadgets
(Corrects headline, first two paragraphs to state operating profit will rise 55 percent to 250 bln yen, not more than triple to 160.9 bln yen)
TOKYO May 10 (Reuters) - Panasonic Corp forecast its operating profit will rise 55 percent in the year to March 31 as it steps back from struggling operations in TVs and other consumer gadgets in favour of selling machinery, components and electronic equipment to other businesses.
The company expects operating profit to rise to 250 billion yen ($2.52 billion) in the current business year from last year's 160.9 billion yen. That compares with an average 241 billion yen forecast from 18 analysts surveyed by Thomson Reuters I/B/E/S before the company released its latest earnings figures on Friday.
Panasonic's CEO, Kazuhiko Tsuga has promised to weed out within two years any loss-making or low-profitability units that fall short of a 5 percent annual operating margin threshold. Further restructuring, however, could add to costs and squeeze its bottom line.
Panasonic's strategy to pull away from consumer electronics contrasts with domestic rival Sony Corp, which is doubling down on mobile phones, cameras and game consoles in a bid to revive the fortunes of its core consumer electronics business, which still accounts for more than half of revenue.
At Tsuga's company, TVs, DVD players and other home entertainment gadgets represent less than one-fifth of sales, leaving it more options to pursue profits elsewhere. Panasonic's biggest earning segments are appliances, such as washing machines and refrigerators, and the division it dubs "eco solutions", which makes light fixtures, toilets, ceiling fans and other household fittings that hark back to the company's beginnings in 1908 making electrical extension sockets.
In October, Tsuga bit the bullet on non-performing businesses by writing down billions of yen in tax-deferred assets and goodwill related to its businesses making mobile phones, solar panels and small lithium batteries. The result was a net loss of 754.25 billion yen last business year, nearly matching the prior year's record 772.17 billion yen loss.
Like Sony, however, the company is relying on asset sales to underpin its finances as it tries to revive profit growth, pledging to keep annual free cashflow above 200 billion yen. Its disposals have included a Tokyo office building and $1 billion worth of stocks in companies such as Toyota Motor Corp.
The value of the company's assets fell to 5.4 trillion yen at the end of the latest business year from 6.6 trillion a year earlier, as a result of asset disposals and writeoffs.
Over the next two years, Panasonic, which has seen its sales shrink by one-fifth from a peak of $92 billion six years ago, plans to spend $2.5 billion to revamp its businesses.
It has yet to announce additional staff cuts, after shedding 40,000 jobs over the past two years. With 300,000 workers it remains one of Japan's biggest employers.
Since the start of the year, the company's shares have gained 43 percent, keeping pace with a 40 percent rally in the benchmark Nikkei average as weakness in the yen boosted the outlook for exporters. Panasonic's shares rose 3.7 percent on Friday to close at 749 yen before it released its latest earnings figures. ($1 = 99.3050 Japanese yen) (Reporting by Tim Kelly; Editing by Edmund Klamann)