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Panasonic: Layoffs, But Profit Reported

5/02/2011 12:00:00 AM Eastern
OSAKA, JAPAN – While Panasonic reported last week it will layoff about 17,000 workers worldwide, the company announced an annual profit and higher sales for fiscal year 2011 ended March 31.

Panasonic, which as of March 31 had 366,937 employees worldwide, expects total employees to be at 350,000 by March 31, 2013 when the next fiscal year ends as part of a reorganization. On the same date in 2010 total Panasonic had 385,000 employees worldwide, a spokesman said.

Panasonic expects the restructuring charges will be the 110 billion-yen level in fiscal 2012 and the 50 billion yen level in fiscal 2013.

Some of the layoffs involve Sanyo and Panasonic Electric Works which, as of April 1, officially became part of the corporation worldwide, and would include a consolidation of management and operations functions, according to a company spokesperson. But the layoffs are also clearly a response to the sluggish economy, the current market for CE products in key worldwide regions and the continued economic impact of the Japan earthquake.

As part of the reorganization its AVC networks, the bulk of its CE business worldwide, and its home appliances and related businesses, will be part of a new consumer sector.

Also, as part of the restructuring Panasonic will increase the purchase of LCD panels from outside vendors and transfer a production line of its third domestic PDP plant in Amagasaki City, in Japan, to China to reduce costs. The company will also focus on panel sizes with which it can give full play to its competitiveness in flat panels. For TV sets, it will focus on improving profitability by introducing TVs with distinctive features, while stepping up production overseas, the company said.

As for the 2011 fiscal year, income before income taxes was 178.8 billion yen from a loss of 103.5 billion yen in fiscal 2010.

Operating profit improved by 60 percent to 305.3 billion yen from 190.5 billion yen in fiscal 2010 due mainly to strong sales on an annual basis, and a wide range of exhaustive cost reductions, including streamlining of material costs and other general expenses, Panasonic reported.

Consolidated group sales for fiscal 2011 increased by 17 percent, to 8,692.7 billion yen from 7,418 billion yen in fiscal 2010, due mainly to the inclusion of sales of Sanyo Electric and its subsidiaries in the company’s consolidated financial results from January 2010 onwards.

By business segment, the digital AVC networks’ sales amounted to 3,304 billion yen, down 3 percent from 3,409.5 billion yen a year ago. Despite favorable sales of Blu-ray Disc recorders, this result was due mainly to sales declines in mobile phones and digital cameras.

Operating profit increased by 32 percent, to 114.9 billion yen from 87.3 billion yen, mainly as a result of fixed cost reduction and streamlining efforts, offsetting the impact of a sales decline and yen appreciation, Panasonic said.

In commenting on the effects of the Japanese earthquake and tsunami in March Panasonic said while operations at factories in the disaster-hit region have been recovering steadily, disruptions in its supply chain are still affecting the group’s operations.
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