One-time gains boost Panasonic’s profit eightfold

PANASONIC posted firstquarter profit yesterday that exceeded analyst estimates after a one-time gain from changes in pension accounting and cost reductions.

Net income rose more than eightfold to ¥107.8 billion (R10.8bn) in the three months to June from ¥12.8bn a year earlier, the Osaka-based maker of consumer electronics said. That beat the ¥14bn median of five analysts’ estimates. The pension gain was ¥79.8bn.

The maker of Viera televisions is headed for its first annual profit in three years as president Kazuhiro Tsuga restructures to stem losses in televisions, semiconductors and cellphones. A weaker yen triggered by Japanese Prime Minister Shinzo Abe’s monetary stimulus is boosting Panasonic’s overseas earnings.

“The worst is over, but it’s way too early to say whether the key businesses are recovering,” said Yoshihiro Nakatani, a fund manager at Asahi Life Asset Management in Tokyo.

“Without a recovery in electronics and appliances, it’s too early to be positive on the company.”

Operating profit, or sales minus the cost of goods sold and administrative expenses, gained 66 percent to ¥64.2bn for the quarter. That result, which excludes the pension gain, beat the ¥45bn median of nine analyst estimates in a survey. Sales rose 0.6 percent to ¥1.8 trillion.

Panasonic shares fell 1.5 percent to ¥851 at the close of Tokyo trading before the announcement, paring this year’s gain to 63 percent.

The company’s German listed shares rose 0.7 percent in morning trade.

Panasonic was “reconsidering” how its cellphone operation could be sustained, chief financial officer Hideaki Kawai said in Tokyo yesterday.

The unit’s operating loss totalled ¥5.4bn in the quarter, wider than the ¥3.7bn loss of a year earlier.

The quarterly loss is more than its full-year target of cutting losses at the unit to ¥1.1bn.

“We still need more time to decide how to reform the operation,” and options included expanding into business-use. He declined to say whether it was considering ending consumer handset operations.

Last week, the company agreed to sell its ultrasound diagnostic equipment operations to Konica Minolta.

Panasonic is also seeking a sale of its stake in a health-care unit. In June, the electronics maker selected KKR and Toshiba on a shortlist for second-round bids after receiving offers that valued the division at about ¥200bn, people with knowledge of the matter said at the time.

Segment earnings from the appliances unit fell 39 percent to ¥12.7bn while profit at Eco Solutions surged to ¥16.1bn from ¥3.6bn a year earlier.

Panasonic and its labour union had agreed to a 20 percent bonus cut for the current fiscal year, Chieko Gyobu, a Panasonic spokeswoman, said last month.

Panasonic, the fourthbiggest television maker last year, was not among the top five makers of flat-screen televisions during the March quarter, according to DisplaySearch. China’s TCL ranked third, trailing South Korea’s Samsung and LG. – Bloomberg