$1.26 billion profit: Panasonic back in the black as restructuring plans pay off

In a year of cost cutting that saw the company abandon manufacturing plasma TVs, Panasonic Corporation have bounced back to record a net income profit of 120.44 billion yen (AU $1.26 billion) at the end of Japan’s financial year, up from a loss of 754.3 billion yen (AU $7.94 billion) the year before.

Both pre-tax income and net income turned profitable for the Tokyo-based company according to its annual results for the fiscal year ended 31 March 2014. Pre-tax income improved to 206.2 billion yen from a loss of 398.4 billion yen.

Overall sales were up 6 per cent to 7,736.5 billion yen. Domestic Japanese sales increased by 3 per cent on the previous year, to 3,897.9 billion yen and overseas sales improved by 9 per cent to 3,838.6 billion yen.

Operating profit increased by 90 per cent to 305.1 billion yen from 160.9 billion yen, largely due to “improving unprofitable business” the company said.

When broken down into segments, appliance sales increased by 10 per cent to 1,197.6 billion yen from the previous year. However, profit decreased by 22 per cent to 28.5 billion yen, compared to 36.4 billion yen in 2013.

Despite a decrease in household air conditioners in China, appliances sales increased due to increased consumer spending in Japan before a rise in sales tax.

“Streamlining and cost reductions were unable to offset negative impact of yen depreciation on products manufactured overseas importing to Japan,” Panasonic said.

Sales in AVC Networks, which includes TVs and smartphones, decreased by 3 per cent to 1,573.4 billion yen from 1,621.4 billion yen a year ago. Panasonic said business to business sales had remained strong but consumer sales declined mainly due to the termination of plasma manufacture.

AVC segment profit jumped by 159 per cent to 21.5 billion yen from 8.3 billion yen, mainly “due to a sales increase in B to B and business restructuring especially in TVs and panel businesses.”

Panasonic predicts sales will remain flat in 2015 against current figures, operating profit will increase by 2 per cent to 310 billion yen and net income will improve 16 per cent to 140 billion yen.