TOKYO (Reuters) - Panasonic Corp (6752.T), one of Japan’s best known brands, reported a record loss on slumping sales of flat panel TVs on Friday, but promised a return to profit this year under a turnaround plan that faces deepening investor skepticism.
Sales of TVs, cameras and recorders combined fell 21 percent for the year ended March 31 and the strong yen cut into overseas earnings on everything from electronic components to refrigerators.
Panasonic president Fumio Ohtsubo, who is handing over the reins in June, said the company’s 772.2 billion yen ($9.7 billion) net loss capped a turbulent six-year period when the diversified manufacturer was rocked by the external forces from the global recession to last year’s earthquake in Japan and flooding in Thailand.
But he said management had made a mistake by investing so heavily in production of LCD and plasma televisions in 2006 before the downturn began.
“This was an excessive investment, something which I regret,” said Ohtsubo.
Panasonic forecast an operating profit of 260 billion yen, slightly ahead of a consensus estimate of 241.5 billion yen profit from analysts surveyed by Thomson Reuters I/B/E/S, but investor sentiment remained dark.
Ahead of its results, Panasonic shares ended down 1.6 percent to 570 yen, its lowest closing level since September, 1980, Thomson Reuters Datastream data showed.
“There’s no reason to buy the stock even at current levels. Just because they showed a rebound in profits isn’t enough reason to buy,” said Hideyuki Ishiguro, assistant manager of investment strategy at Okasan Securities.
“Panasonic’s a manufacturer. You need to have new products that excite people, that make people see the picture of what future growth will look like. A company that’s forced to do so much restructuring in order to stay out of the red isn’t attractive (to shareholders),” he said.
Panasonic said it expected sales of flat screen TVs to fall to 15.5 million units this business year after it sold 17.5 million TV sets in the previous year.
Like domestic rivals Sony and Sharp, Panasonic’s TV business has been hammered by competition from Korea’s Samsung Electronics (005930.KS) and shrinking demand for its large plasma sets.
Kazuhiro Tsuga, 55, currently in charge of revamping the TV business, takes over as president of Panasonic from Ohtsubo.
By 2015, research company DisplaySearch estimates demand for plasma sets will shrink 38 percent to $7 billion.
Panasonic expects that a fresh round of restructuring that cut 17,000 jobs will lead the TV unit back to profit and spur a V-shaped recovery in the current year.
Much of Panasonic’s loss was the result of restructuring charges, although writedowns for its Sanyo Electric unit added to the deficit.
Panasonic still employs 350,000 people worldwide, three times as many as at Samsung Electronics and double Sony’s workforce.
The company is relying on sales of home appliances, solar panels and batteries to help boost profits as well as expansion in emerging markets. ($1 = 79.9500 Japanese yen)
Reporting by Reiji Murai in TOKYO and Yoshiyuki Osada in OSAKA, Writing by Mari Saito; Editing by Muralikumar Anantharaman