A just released report forecasts that the Panasonic Corporation - a premier Japanese electronic goods manufacturer - will suffer an annual net loss of $5.5 billion US/Cdn or ¥420 billion this year.
The loss, which will be its second biggest ever, compares with the company's previous forecast for a net profit of ¥30 billion (~Cdn/US $384 million) in the year to March 2012 and 2010's net profit of ¥74 billion (~Cdn/US $950 million) .
Citing a lack of demand in Europe and the U.S. and reformation costs for the company as a whole have crippled the electronics giant.
For the period of July - September of 2011, the company reported an operating profit of ¥42 billion (~Cdn/US $538 million), beating its own forecast of ¥4.4 billion (~Cdn/US $56 million) profit, but falling short of analysts' average estimate of ¥50 billion (~Cdn/US $640 million). It had reported an operating profit of ¥85.2 billion (~ Cdn/US $1.091 billion) a year earlier.
Global consumer confidence remained weak with more than 60 per cent of consumers saying it was not a good time to spend and one in three North Americans saying they had no spare cash, according to a recent Neilsen survey.
The manufacturer of Viera TV has also cited the one-time charges and effects of a stronger yen responsible for major annual loss in a decade. A strong yen? Someone needs to make a speech or something.
Panasonic has reduced its yearly TV sales target to 19 million, down from 25 million owing to fierce competition from LG Electronics Inc. and Samsung Electronics. As well, with the higher yen, it makes it's products more expensive to purchase, therefore why pay more for a similar product?
"What we need to tackle is the television and related semiconductor businesses," says Uenoyama Makoto (surname first), Panasonic chief financial officer. "If we downsize these, our profits will be completely different."
Even as far back as April 2011, Panasonic had announced it would lay-off some 17,000 people and close 17 plants, with insiders expecting it to slash its plasma television panel output and drop plans for a solar panel factory and a battery plant expansion in Japan.
Shares in Panasonic have declined by 30 per cent in 2011, compare with the two per cent growth of Samsung.This is evidence that despite a global recession, it is still possible to do well - unless you are Panasonic.
Already affected by the March 11, 2011 earthquake, tsunami and radiation concerns, its manufacturing facilities in Thailand have been slammed by flooding.
As well, let's not forget that Panasonic has perhaps over-extended itself by spending over (Cdn/U.S.) $6-billion (~¥469-billion) to purchase stakes in Sanyo Electric Co. and the Panasonic Electric Works Company back in 2010.
Files compiled by Andrew Joseph