Panasonic Corporation (NYSE:PC) (TYO:6752) reported a 16 percent gain in the second-quarter operating profit as it streamlines the loss-making TVs and focus on batteries and household appliances. For the quarter that ended Sept. 30, company posted an operating profit of 48.8 billion yen ($613.22 million) against a profit of 42 billion yen a year ago. The announced results were lower than the estimate of 55.6 billion yen profit by the analysts.
The electronics conglomerate also lowered its outlook for full-year operating profit to 140 billion, from the earlier forecast of 260 billion yen. For the year, on March 31, the company recorded an operating profit of 43.7 billion yen.
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The maker Viera TV also announced that it would book a massive $9.6 billion net loss this fiscal year, as it undergoes a major overhaul of its troubled business. The company also said, though it will achieve an operating profit, restructuring costs and write downs will ultimately result in a 765 billion yen shortfall. For the six months up til September, the company’s sales of flat-panel TVs, digital cameras, and mobile phones tumbled, while sales of refrigerators and washing machines were encouraging.
“The global economy continues to contract with much deep remaining uncertainty, due to the European financial crisis and slowdown of the Asian economic expansion, including China,” the company said in a statement.
Panasonic Corporation (NYSE:PC) (TYO:6752) also warned that a territorial dispute between Beijing and Tokyo, over East China Sea island chain, could also hit sales by $1.25 billion, as angry Chinese consumers neglect Japanese-brand exports. Moody’s rating, downgraded Panasonic Corporation (NYSE:PC) (TYO:6752) last week, cited weak profitability and high debt.
Apart from the competition, Japan’s electronics sector has also struggled by the rise of the yen, which makes its products less competitive overseas. The yen hit a record high around 75 on the dollar late last year and remains strong. The company’s rivals, like Sony Corporation (NYSE:SNE) and Sharp Corporation (PINK:SHCAY), which announced their earnings this week, have struggled in the television segment amid falling prices and stiff competition from overseas rivals. Japan’s Toshiba Corp (TYO:6502) (PINK:TOSBF) and Fujitsu Limited (PINK:FJTSY) slashed their full-year profit forecasts on Wednesday.
This year up till now, shares have dropped more than 20 percent, compared with a more than 5 percent gain in Tokyo’s benchmark Nikkei 225.