Panasonic Expects Flat Profits Despite Price Increases And Supply Problems

Panasonic Corp estimated flat operating profits this fiscal year on Wednesday, citing component shortages and increased material costs as risks to profitability.

The Japanese company forecasted an operational profit of 360 billion yen for the fiscal year ending March 31, 2023, down from 357 billion the previous year.

According to Refinitiv data, the prediction is 5.9% lower than the average expectation of 382.7 billion yen from 20 analysts.

Panasonic manufactures anything from washing machines to heavy gear.

It, like others, has been harmed by rising material prices following Russia’s invasion of Ukraine. Yuki Kusumi, the company’s CEO, said last month that the company couldn’t pass on all of the price increases to customers.

It has also been dealing with ongoing component shortages caused by the COVID-19 epidemic, with China’s stringent lockdowns raising fears of new supply chain disruptions.

It anticipates electric vehicle demand to expand in its Energy segment, which makes batteries for Tesla Inc, and will strive to mitigate increasing metal costs, such as lithium, nickel, and cobalt, by “pricing revisions” and “rationalisation.” It didn’t go into detail about that.

Panasonic also mentioned the possibility of supplier plant lockdowns as a result of COVID-19 and the global scenario.

Panasonic, Contemporary Amperex Technology Co Ltd of China, and LG Energy Solution of South Korea are all suppliers of batteries to Tesla. According to Japanese public broadcaster NHK, it aims to construct a mega-factory in the United States to produce a new and more advanced battery for Tesla.

The battery has a 4680 configuration (46 millimetres wide by 80 millimetres height), which means Tesla should be able to reduce production costs while increasing vehicle range.

Panasonic made an operational profit of 83.3 billion yen in the three months ending March 31, compared to 31.8 billion yen the previous year. Nine analysts surveyed predicted a profit of 85.5 billion yen.

Panasonic has announced plans to sell shares in its supply chain management segment in order to raise capital to invest in the company.

Blue Yonder, a machine learning business that Panasonic purchased for $7.1 billion last year, would be packaged with other supply chain services in Panasonic’s sale.

It did not indicate when or how much it hoped to raise through a stock offering.

As it moves away from making low-margin consumer electronics, Panasonic has expanded into supply chain software, a market it expects to double in size over the next five years.

(Adapted from EconomicTimes.com)

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