TOKYO (Reuters) - Panasonic Corp (6752.T) on Thursday reported a 12% drop in its second-quarter operating profit, hurt by the ongoing Sino-U.S. trade war and its battery business with Tesla Inc (TSLA.O) staying in the red.
Still, the Japanese electronics company’s September-quarter earnings of 83.9 billion yen ($772.06 million) was 33% higher than analysts’ average estimate polled by Refinitiv, thanks to its housing and home appliances businesses posting solid profits.
A year earlier, Panasonic, the exclusive battery cell supplier for new electric vehicles (EVs) made by Tesla, had earned 95.2 billion yen.
“We are quickly ramping up battery production (at the Gigafactory joint venture with Tesla), but improvements in production efficiency have been delayed,” Chief Financial Officer Hirokazu Umeda said at an earnings briefing on Thursday.
But Umeda said the joint venture is still aiming to make start making profits at least on a monthly basis, by the end of the financial year on March 31. “Tesla posted profits in the latest earnings and that’s positive for us.”
The U.S. electric carmaker surprised investors last week with a quarterly profit that sent its shares soaring.
Panasonic’s automotive business, which includes car batteries, recorded an operating loss of 12.7 billion yen compared with a 7.1 billion yen loss in the year-ago quarter.
The company maintained its profit forecast for the year through March at 300 billion yen, compared with an average estimate of 293.94 billion yen from 19 analysts.
Panasonic has turned its focus away from low-margin consumer electronics and bet on businesses that sell to automakers as well as to corporations such as factory-owners and firms that automate processes.
But the shift has failed to lift profits at a time when the U.S.-China trade war has hit industrial purchases and output, and the global car market is contracting.
Tesla is also yet to show sustained profits. The Japanese company’s chief executive, Kazuhiro Tsuga, has admitted he underestimated development costs for car components and risks associated with Tesla.
While Tsuga has promised to expand into “solutions services” for business customers by leveraging the company’s expertise in various industries, he is yet to detail what that growth strategy would look like.
Tsuga is expected to hold a strategy briefing on Nov. 22. He was scheduled to attend an earnings briefing on Thursday, but canceled earlier this week.
Panasonic has been actively recruiting executives from overseas tech companies such as software giants SAP [SAPA.UL] and Microsoft (MSFT.O) to shake up the traditionally conservative culture of the 101-year-old company.
The company this month appointed Google (GOOGL.O) Vice President Yoky Matsuoka as a fellow with the executive team.
Reporting by Makiko Yamazaki; Editing by Shri Navaratnam, Amy Caren Daniel and Simon Cameron-Moore