Panasonic Trips on Stronger Yen

Corp. said Tuesday net profit for the fiscal second quarter slid 16% as the electronics giant absorbed the impact of a stronger yen, higher raw-materials costs and anemic consumer spending amid a sagging global economy.

But unlike peers Sony Corp. and Canon Inc., Panasonic hasn't cut its profit forecast or capital expenditure plans for the fiscal year ending March. The company on Tuesday remained cautiously confident in its strategy going forward, saying it has "concerns about the weak real economy" and that it could revise forecasts when it reports third-quarter earnings early next year.

Best known for products like television sets and DVD players, Osaka-based Panasonic said net profit for July-September fell to ¥55.5 billion ($593 million), from ¥65.8 billion a year earlier.

While the Beijing Olympics boosted demand for its flat-panel TVs in the quarter, "severe business conditions" in Japan and other markets took their toll. Sales fell both at home and in the Americas, Europe and Asia, and revenue dropped 4% to ¥2.19 trillion.

Like Sony and Canon, Panasonic must cope with the rapid appreciation of the yen versus the dollar and the euro, currencies in which it books much of its sales. The company sells more than half its goods overseas.

As intense global competition keeps a lid on how much consumer goods makers can charge for their products, the impact of higher operating costs shows up more clearly in operating profit. At Panasonic, these slid 19% to ¥118.6 billion from ¥146.1 billion.

The company, previously known as Matsushita Electric Industrial Co., renamed itself after its best known brand at the start of this month. Panasonic has lacked the marketing pull of household names such as Sony, and now plans to capitalize on its rebranding with big pushes for its consumer goods in markets like Europe next spring.

But with the major economies of Europe -- like the U.S. and Japan -- teetering on the verge of recession, conditions will remain tough for Panasonic and for other Asian consumer electronics companies.

Source: Online.wsj.com