Panasonic Reports Fiscal 2012 Annual Results

Panasonic Corporation (Panasonic)

today reported its consolidated financial results for the year ended March 31, 2012 (fiscal 2012). Consolidated Results Consolidated group sales for fiscal 2012 decreased by 10% to 7,846.2 billion yen from 8,692.7 billion yen in the year ended March 31, 2011 (fiscal 2011). Of the consolidated group total, domestic sales amounted to 4,162.0 billion yen, down 8% from 4,514.3 billion yen in fiscal 2011. Overseas sales decreased by 12% to 3,684.2 billion yen from 4,178.4 billion yen in fiscal 2011. In fiscal 2012, business conditions deteriorated in Japan and overseas due to multiple factors, such as the concern of the shortages of the electric supply caused by the Great East Japan Earthquake, the disruption of supply chains affected by the flooding in Thailand, the economic turmoil triggered by the European financial crisis, and the historically high yen. Under such business circumstances, as the second year of the three-year midterm management plan called "Green Transformation 2012 (GT12)," Panasonic implemented various measures. In particular, the company worked towards changing its business structure on the basis of paradigm shift to growth as follows: 1) from existing businesses to new businesses – such as energy 2) from Japan-oriented to globally-oriented 3) from individual product-oriented to solutions & systems business-oriented With sales increases in products, such as air conditioners and refrigerators, meeting local needs in India and Brazil, and "HIT solar cells" by maximizing Panasonic Group sales strength in Japan, the positive results have started showing in some regions and businesses. On the other hand, the operating results in the flat-panel TVs and semiconductor businesses worsened significantly due to factors, such as the aforementioned severe business conditions, intense price competition and a decline in demand following the shift to terrestrial digital broadcasting in Japan. Following the management decision to address the negative factors impacting on the future profitability, the company implemented radical restructuring initiatives, including the business integration of unprofitable businesses. In January 2012, the company conducted the group reorganization as scheduled and started a new organization, which consists of nine business domain companies: "AVC Networks Company," "Appliances Company," "Systems & Communications Company," "Eco Solutions Company," "Automotive Systems Company," "Industrial Devices Company," "Energy Company," "Healthcare Company," "Manufacturing Solutions Company," and one marketing sector: "Global Consumer Marketing Sector." With this reorganization, the company lays out the framework to utilize the full advantages of the Panasonic Group in order to establish the foundations for it to become a Green Innovation Company. In order to realize this objective, the company established its new business structure, which enables it to strengthen a more direct relationship with consumers globally. Furthermore, the company implemented the system that brings out the total strength of the Panasonic Group, such as comprehensive solutions, and maximizes synergies in each business as well as eliminates its overlapping businesses. Despite streamlining efforts for raw materials and fixed cost reductions, operating profit1 decreased by 86% to 43.7 billion yen from 305.3 billion yen in fiscal 2011. This result was due mainly to the price decline and the appreciation of the yen, in addition to a sales decrease affected by the Great East Japan Earthquake and the flooding in Thailand. Income (loss) before income taxes turned to a loss of 812.8 billion yen from a profit of 178.8 billion yen due mainly to incurring business restructuring expenses of 767.1 billion yen, such as early retirement charges and impairment losses of goodwill and property, plant and equipment, as other income (deductions). Net income (loss) attributable to Panasonic Corporation turned to a loss of 772.2 billion yen from a profit of 74.0 billion yen in fiscal 2011 by incurring 25.5 billion yen for an adjustment to deferred tax assets and liabilities for changes in Japanese corporate tax rates as a provision for income taxes.