Panasonic’s third-quarter profits plummet as material costs rise and device sales decline

A Panasonic Corp logo is pictured at CEATEC JAPAN 2017 (Advanced Technology Combined Exhibition) at Makuhari Messe in Chiba, Japan October 2, 2017. REUTERS/Toru Hanai

Join now for FREE unlimited access to


TOKYO, Feb 2 (Reuters) – Japan’s Panasonic Corp (6752.T) reported a bigger-than-expected 44% drop in third-quarter operating profit on Wednesday, hit hard by rising raw material costs, the shortage of components and a decline in domestic sales of household appliances.

Panasonic has sought to reduce its dependence on low-margin consumer electronics and appliances, focusing on automotive batteries for Tesla Inc (TSLA.O), production machinery, components and, more recently, supply chain management services.

That said, consumer appliances and home appliances, which benefited from a boom in home sales during the coronavirus shutdowns, still make up a big chunk of revenue.

Join now for FREE unlimited access to


Operating profit for the three months to Dec. 31 fell to 73 billion yen ($636 million), well below Refinitiv’s consensus estimate of 107 billion yen.

The industrial conglomerate said the profit margin of the division that houses its consumer and appliance businesses has been squeezed by the rising cost of iron, copper and other materials.

Other divisions that have struggled with rising material prices and component shortages include its automotive business, which manufactures sensors and other automotive components, and its energy business, which has recently benefited from growth. battery sales to Tesla.

Its decade-old partnership with Tesla has been turning a profit since last year as electric vehicle sales surged. Panasonic is set to start supplying the U.S. automaker with a new generation of batteries that will reduce electric vehicle manufacturing costs and could extend vehicle range.

Third-quarter earnings were also weighed down by a revaluation of assets and debt related to its $7.1 billion purchase last year of Blue Yonder, a U.S. company that uses machine learning to help businesses connect factories to warehouses and retailers. The reassessed amount was not disclosed.

Panasonic sold its stake in Tesla for around 400 billion yen to help fund this acquisition.

Panasonic maintained its full-year forecast of an annual profit of 370 billion yen, a figure in line with analysts’ forecasts.

($1 = 114.7400 yen)

Join now for FREE unlimited access to


Reporting by Tim Kelly; Editing by Edwina Gibbs

Our standards: The Thomson Reuters Trust Principles.

About Anne Wurtsbach

Check Also

Chinese brands outnumber foreign brands among Singles’ Day bestsellers

BEIJING, Nov 12 (Reuters) – Chinese consumers tightened their wallets on this year’s Singles Day …