Panasonic sees $5.5bn annual loss

Japanese electronics maker Panasonic Corp forecast an annual net loss of 420 billion yen ($5.5 billion), its biggest in a decade, as restructuring costs ballooned, and a soaring yen and weak demand in the United States and Europe eroded income. Panasonic accelerated the pace of restructuring as it races to shake off losses at its TV unit -- a problem it shares with rival Sony -- and strips out overlapping businesses after its buyout of subsidiary Sanyo. In April, Panasonic said it would cut 17,000 jobs by March 2013, but the maker of Viera televisions and Lumix cameras announced on Monday it now expects to reach its goal of slimming its work force to 350,000 or fewer a year ahead of schedule. Panasonic said it will stop liquid-crystal panel production at its Mobara plant near Tokyo and is canceling its plans to ship plasma-panel manufacturing equipment to Shanghai to start production there as it aims to turn a profit on TVs in its next fiscal year. "The net loss of 420 billion yen includes an increase in the cost of restructuring. It has lowered the assumed exchange rates to 76 yen, which gives the company some buffer even if the dollar slips from the current level after today's intervention," said Hiroyuki Fukunaga, CEO of Investrust. "So even though it is reporting a loss, the market may think all the negative factors have been priced in, especially given that its share price has fallen about a third from around 1,200 yen at the beginning of this year." Japan sold the yen for the second time in less than three months after it hit another record high against the dollar on Monday, intervening to counter speculation that officials say is hurting the world's No. 3 economy. The soaring yen is making it ever harder for Panasonic to compete with the likes of Samsung Electronics. The quarterly loss, which will be its second biggest ever, compares with the company's previous forecast for a net profit of 30 billion yen in the year to March 2012 and last year's net profit of 74 billion yen. Shares of the company closed 2.1 per cent lower before the results. They have fallen 31 per cent so far this year, compared with a 13 per cent decline in the broader market. 'Birth pangs of new strategy' "What we need to tackle is the television and related semiconductor businesses," Chief Financial Officer Makoto Uenoyama told reporters. "If we downsize these, our profits will be completely different," he added, calling the forecast losses "the birth pangs of switching to a new strategy." The company cut its full-year operating profit forecast to 130 billion yen from 270 billion yen. That is far below market expectations of a 225 billion yen profit, based on the average estimate of 21 analysts polled by Thomson Reuters I/B/E/S. It also slashed its estimate for annual TV sales to 19 million sets from 25 million. Sony said on Monday it will split its television business into three divisions to make operations more accountable as part of efforts to turn around the loss-making business. For July-September, Panasonic reported an operating profit of 42 billion yen, beating its own forecast of 4.4 billion yen profit, but falling short of analysts' average estimate of 50 billion yen. It had reported an operating profit of 85.2 billion yen a year earlier. For the remainder of the business year, Panasonic estimates a dollar-yen rate of 76 yen and a rate of 105 yen against the euro.