Panasonic shares jump as 23% profit rise predicted

Kazuhiro Tsuga is changing Panasonic's focus. Photo / Bloomberg

Panasonic's shares jumped after the company forecast profit will climb 23 per cent next fiscal year to the highest since 2008 on demand for housing and car information and entertainment systems.

The stock was trading 3.2 per cent higher yesterday at 1576 ($17.45).

Operating income will probably be 430 billion in the year starting April 1, the company said yesterday after the market closed.

President Kazuhiro Tsuga has steered away from televisions and smartphones to focus on housing and entertainment, information systems for cars and on manufacturing batteries with Tesla Motors.

Tsuga said the diversifying electronics maker plans 200 billion in strategic investments in the coming year, part of a push to spend 1 trillion to help reach its goal of 10 trillion in revenue by fiscal 2018.

"The attention is now on whether the company can grow in scale while continuing to improve profitability," said Yu Okazaki, an analyst at Nomura Holdings.

The company raised 400 billion in a bond offering this month to help fund capital spending and acquisitions.

The operating profit forecast for the year from April 1 exceeds the 402 billion average of 17 analysts' estimates compiled by Bloomberg.

Sales next fiscal year will climb to 8 trillion, the company says.

"Business-to-business solutions and automotive are areas where there is a possibility of large scale acquisitions measuring in tens of billions of yen," Tsuga said. "In the automotive business, we have already secured 70 per cent of the orders needed to meet our fiscal 2018 sales target."

The company kept its target for 10 trillion in revenue by fiscal 2018. In that year, Panasonic has said it expects sales of 2.5 trillion in its business that includes avionics and security systems, about 2.1 trillion for automotive components, 2 trillion for housing and 2.3 trillion for household appliances.

Panasonic reported its first annual net income since 2011 last fiscal year, after Tsuga halted production of money-losing plasma TVs and stopped developing smartphones for consumer use, as part of his strategy of targeting businesses rather than consumers.

Its stock has gained about 28 per cent over the past 12 months.

In the latest sign of success with efforts to move beyond consumer electronics, Panasonic earned 80.3 billion in operating profit from its automotive and industrial systems segment in the nine months to December. That made it the single biggest contributor to profit.

Its eco-solutions business, which includes lighting and housing-related materials, contributed 75.7 billion in profit, more than three-and-half times the audiovisual business.

As part of Panasonic's strategic shift, it set up a manufacturing unit in the United States at Tesla's battery "gigafactory" in Nevada. The manufacturer, which was started in 1918 by Konosuke Matsushita, his wife and brother-in-law in a two-storey house, is also developing self-driving technologies for cars, including parking assistance.

— Bloomberg