Panasonic shocked the market as it forecast full-year losses would hit ¥420bn (£3.3bn), the worst in a decade, with one executive dubbing it the "birth pangs" of changing strategy.
The group had been expected to post a ¥30bn profit for the full year, but the ¥404bn restructuring of its flat-panel-television and semiconductor businesses will send it tumbling to huge losses. Makoto Uenoyama, the chief financial officer of Panasonic, said, "What we need to tackle is the television and related semiconductor business," adding, "if we downsize these, our profits will be completely different." The company predicts the two struggling businesses will return to profit in the financial year ending in March 2013.
Pre-tax profits tumbled in the second quarter from ¥60.3bn a year earlier to a loss of ¥141.9bn, mainly down to the cost of restructuring the business.
The group also suffered from falling prices, the drop in sales following the earthquake in Japan, and the strength of the yen. This was set against the backdrop of the slowing global economy. The increased competition in the market prompted the management to slash its television sales forecasts from 25 million to 19 million. The company announced in April it was to cut 17,000 jobs by 2013 to below 350,000 as it looked to overhaul the group, and yesterday announced it would accelerate those plans. The cuts will now kick in before next March.
Panasonic will also shut two factories in Japan that make television panels, one that specialises in plasma screens, and the other in LCD.