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article imagePanasonic forecasts worst ever loss of $10 billion

By Richard Milnes     Feb 4, 2012 in Business
Electronics company Panasonic has significantly downgraded its profit forecast for the year ending 31 March 2012, after reporting poor quarterly results.
Fiscal 2012 third quarter and nine-month financial results
On 3 February, Panasonic announced its third quarter financial results.
The net loss for the third quarter itself (October to December) was 197.6 billion yen ($2.6 billion), contributing to a 333.8 billion yen ($4.3 billion) net loss for the total nine-month period (April to December 2011).
Third quarter sales were down 14 percent compared with the previous year. This was attributed mainly to “sluggish sales in digital AV products such as flat-panel TVs.” Nine-month sales figures were down 10 percent from 6,653 billion yen ($86 billion) to 5,965 billion yen ($77 billion).
How did other electronics companies do?
Sony and Sharp, also both reported actual losses for the nine-months ending 31 December 2011.
Sony reported a third quarter loss of 159 billion yen ($2 billion). The same period a year ago had produced a profit of 72 billion yen ($0.9 billion).
This resulted in a nine-months to 31 December 2011 net loss of 201 billion yen ($2.6 billion), compared to a profit of 129 billion yen ($1.7 billion) for the same period a year ago. Sales and operating revenue fell by 12.6 percent from 5,600 billion yen ($72 billion) to 4,893 billion yen ($63 billion).
It was a similar story with Sharp. For the nine-months to 31 December 2011, a loss of 213.5 billion yen was reported. The same period a year ago had produced a profit of 21.8 billion yen. The percentage drop in sales of 18.3 percent, for this period, was even more drastic than at Sony. Sales fell to 1,904 billion yen from 2,329 billion yen the previous year.
Although Toshiba reported a net loss of 10.6 billion yen in the third quarter, its overall results for the three quarters showed a profit of 12.1 billion yen, which was significantly lower than the profit for the same period one year prior of 40.2 billion, representing a drop of 28.1 billion.
Panasonic, Sony, Sharp and Toshiba all blamed similar factors for their poor results including the flooding in Thailand, appreciation of the yen and the European debt crises.
Annual forecast
Panasonic’s revised annual forecast expects the net loss of the Company to be 780 billion yen (approximately US$10 billion). Panasonic reports: “The amounts of loss will be the worst ever.”
The previous forecast, which was made on 31 October 2011, had only predicted a net loss of 420 billion yen (about $5.5 billion at today’s exchange rate). The difference between the two forecasts of 360 billion yen, largely relates to an additional goodwill impairment of 250 billion yen and 60 billion yen additional losses due to the flooding in Thailand.
Goodwill on Panasonic’s consolidated Statement of Financial Position (Balance Sheet) stood at just under 925 billion yen on 31 March 2011, at the end of fiscal 2011. The auditors will need to pay particular attention to any remaining goodwill on the balance sheet at fiscal 2012 year-end.
Panasonic optimistic for the future
Panasonic reported “the Company believes this forecast is the bottom of a v-shaped recovery which will be achieved through streamlining its management structure and completing the radical restructuring initiatives in unprofitable businesses in fiscal 2012.”
Exchange rate
1 US$ is currently equal to 76.6 Japanese Yen.
Sources and further information
Panasonic website
Sony website
Sharp website
Toshiba website
More about Panasonic, Sony, Toshiba, Sharp, Quarter
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