Japan's Panasonic on Wednesday posted a larger-than-expected 44 percent slide in third-quarter operating profit, hit hard by rising costs for raw materials, component shortages and a drop in domestic sales for appliances.
Panasonic has sought to reduce its reliance on low-margin consumer electronics and appliances, shifting its focus to automotive batteries for Tesla, production machinery, components and more recently supply chain management services.
That said, consumer and home appliances, which benefited from a stay-at-home sales boom during coronavirus lockdowns, still account for a big chunk of revenue.
Operating profit for the three months to December 31 dropped to JPY 73 billion (roughly Rs. 4,772 crore), far short of a Refinitiv consensus estimate of JPY 107 billion (roughly Rs. 6,994 crore).
The industrial conglomerate said the profit margin at the division which houses its consumer and home appliances businesses was squeezed by rises in the cost of iron, copper and other materials.
Other divisions that had to cope with climbs in material prices and component shortages, included its automotive business, which makes sensors and other car components, and its energy business, which has recently benefited from growing battery sales to Tesla.
Its decade-old partnership with Tesla has been yielding a profit since last year as sales of electric vehicles surged. Panasonic is set to begin supplying the US automaker with a new generation of batteries that will lower EV manufacturing costs and could extend vehicle range.
Third-quarter profit was also weighed down by a revaluation of assets and debt related to its $7.1 billion (roughly Rs. 53,068 crore) purchase last year of Blue Yonder, a US company that uses machine learning to help companies connect factories to warehouses and retailers. The amount revalued was not disclosed.
Panasonic sold its stake in Tesla for about JPY 400 billion (roughly Rs. 26,149 crore) to help fund that acquisition.
Panasonic stuck with its full-year forecast for annual profit of JPY 370 billion (roughly Rs. 24,188 crore) — a figure in line with analysts' forecasts.
© Thomson Reuters 2022
Affiliate links may be automatically generated - see our ethics statement for details.