UPDATE 7-Panasonic slashes profit forecast, to restructure

RESTRUCTURING

The company warned it may miss its target to sell 11 million flat TVs this business year, underscoring an increasingly gloomy outlook for consumer demand as Japan and other major economies sink into recession.

It now expects flat TV prices to fall 30 percent in the current business year, compared with its original estimate of a 20 percent decline.

But Panasonic will also be hit by 60 billion yen in appraisal losses on its shareholdings and a total 155 billion yen in restructuring charges as it consolidates plants and closes unprofitable operations.

Panasonic aims to achieve profit growth in the year starting April 2009 and the restructuring steps are expected to help the company cut costs by 50 billion yen in the new year, Uenoyama said.

The company cut its operating profit forecast by 39 percent to 340 billion yen for the year to March and lowered its sales outlook by 7.6 percent to 8.5 trillion yen.

The revisions were expected after a source familiar with the matter said earlier on Thursday the maker of Viera flat TVs and Lumix digital cameras was likely to cut its annual operating profit forecast by at least 30 percent.

Sony, the maker of Bravia flat TVs, Cyber-shot digital cameras and PlayStation game consoles, last month cut its operating profit forecast by 57 percent to 200 billion yen for the year to March.

Sharp Corp (6753.T) also lowered its profit forecasts last month, hurt by sluggish sales of mobile phones in Japan.

Ahead of the announcement, shares in Panasonic, which is aiming to acquire smaller rival Sanyo Electric Co Ltd (6764.T), closed down 4.7 percent at 1,284 yen, underperforming a 2 percent rise in the Nikkei stock market average .N225. (Additional reporting by Kentaro Hamada, Nathan Layne, Taiga Uranaka; Editing by Hugh Lawson and Jon Loades-Carter)