Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Panasonic cuts full-year outlook as costly raw materials weigh

Published 02/02/2023, 01:43 AM
Updated 02/02/2023, 06:00 AM
© Reuters. FILE PHOTO: A logo of Panasonic Corp is pictured at the CEATEC JAPAN 2017 (Combined Exhibition of Advanced Technologies) at the Makuhari Messe in Chiba, Japan, October 2, 2017.   REUTERS/Toru Hanai/File Photo

© Reuters. FILE PHOTO: A logo of Panasonic Corp is pictured at the CEATEC JAPAN 2017 (Combined Exhibition of Advanced Technologies) at the Makuhari Messe in Chiba, Japan, October 2, 2017. REUTERS/Toru Hanai/File Photo

By Daniel Leussink

TOKYO (Reuters) -Japan's Panasonic (OTC:PCRFY) Holdings Corp cut its annual operating profit forecast by 12.5% on Thursday after lower-than-expected third-quarter earnings, hit by headwinds from a slowing global economy and persistently high raw materials prices.

The company faces challenges amid a tricky outlook for global growth, as it looks to further build out its energy business, which includes making auto batteries for electric vehicle (EV) maker Tesla (NASDAQ:TSLA) Inc.

The conglomerate slashed its operating profit forecast to 280 billion yen ($2.18 billion) for the financial year to Mar. 31, from 320 billion yen, in part due to a less rosy outlook for its industry segment this quarter.

It expects to invest up to about 600 billion yen in the three years through March 2025 in a new battery plant it started building in Kansas last year, Group Chief Financial Officer Hirokazu Umeda told an online earnings presentation.

Panasonic said in presentation materials it will aim to grow profits in automotive batteries by expanding sales of its 2170 model lithium-ion battery cells and commercialising the more advanced 4680 format battery.

The company's energy unit last month signed an agreement with Lucid Group Inc to supply lithium-ion batteries for the EV maker's full lineup, including its "Air" luxury model.

The company also said it aimed to begin supplying the 4680 format battery to the North American market in the financial year through March 2024 to commercialise this model of battery cells.

Panasonic's third-quarter result, with its operating profit rising 16% to 84.4 billion yen in the three months ended Dec. 31, fell short of a mean estimate of 95.31 billion yen profit from nine analysts.

Jefferies analysts said in a note before the earnings release that the company's overly diverse business portfolio lacked focus and was centred on low-margin, cyclical businesses.

Most investors were focused on more clarity and details about U.S. Inflation Reduction Act benefits for Panasonic's EV battery cell production, such as the size and sustainability of subsidies, the analysts added.

© Reuters. FILE PHOTO: A logo of Panasonic Corp is pictured at the CEATEC JAPAN 2017 (Combined Exhibition of Advanced Technologies) at the Makuhari Messe in Chiba, Japan, October 2, 2017.   REUTERS/Toru Hanai/File Photo

The energy business' operating profit fell nearly half to 28.9 billion yen for the nine months through the end of December, hit mainly by high prices for raw materials and transport, despite a 25% rise in sales over the period.

($1=128.6700 yen)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.