Japanese electronics giant Matsushita Electric Industrial Co. continued its rebound into profitability, chalking up 20.9 billion yen (US$176 million) in profits for the third quarter on strong sales of DVD recorders and plasma display TV sets.
The maker of the Panasonic brand had posted a 172 billion yen loss in the same quarter the previous year — sharing the dismal fate of many Japanese makers sorely battered by the global electronics slump and competition from less expensive Asian rivals.
Sales for the October-December period totaled 1.87 trillion yen (US$15.7 billion), up 8 percent from 1.74 trillion yen a year ago, the manufacturer, based in Osaka, said Thursday.
The numbers underline Matsushita's revival efforts following a 431 billion yen loss in the fiscal year ended March 2002 — the worst loss since the company was founded 80 years ago. Sales nose-dived in almost all divisions, including cell phones, electronics parts, home appliances and industrial equipment.
Matsushita remained cautious, lowering its profit forecast for the fiscal year ending in March 2003 to take into account losses in the value of stocks the company owns as the Tokyo stock market languishes at 19-year lows.
It now expects a profit of 25 billion yen (US$210 million), down from the previous forecast for 37 billion yen (US$311 million). Restructuring costs for overseas subsidiaries are also pushing down profits, Matsushita said.
But the company raised its sales forecast for the fiscal year to 7.3 trillion yen (US$61 billion), up 6 percent from the previous year and above its previous forecast for 7 trillion yen (US$59 billion).
In the latest quarter, sales in audiovisual and network equipment were up 5 percent to 1 trillion yen (US$8 billion) — including what the company calls "V-products," which stands for a "V-shaped recovery," such as plasma display TVs, video camcorders and DVD recorders.
Sales in home appliances were up 4 percent at 321.5 billion yen (US$2.7 billion), boosted by demand for refrigerators, vacuum cleaners and microwave ovens in Japan, and air conditioners and refrigerators overseas.
Industrial equipment sales totaled 61 billion yen (US$513 million), up 10 percent, as demand grew for factory machinery in Japan and China. Sales of components and devices surged 19 percent to 397 billion yen (US3 billion), lifted by strong sales of computer chips both in Japan and abroad.
Like other Japanese electronics companies, Matsushita has been struggling to reshape its business to streamline management and cut thousands of jobs. It has been focusing on profitable sectors where it can hope to outdo rivals through cutting-edge technology.
Matsushita is also trying to beef up its global strategy, targeting the U.S. market with key new products like DVD recorders and tying up with local companies in China with hopes to woo that growing market.
Analysts say Japan's electronics makers will continue to face stiff competition, and Matsushita officials acknowledge doubts remain about consumer spending in the United States and the rest of the world because of a possible war against Iraq.
Aggressive spending is unlikely for some time at home in Japan, where a dragged out slowdown and deflation — or falling prices — combined with dwindling paychecks are chipping away at consumer confidence.
For the latest quarter, Matsushita's sales in Japan were up 9 percent to 875 billion yen (US$7 billion), while overseas sales improved 6 percent to 993 billion yen (US$8 billion).
For the nine months ended Dec. 31, Matsushita bounced back to a profit of 38.7 billion yen (US$325 million) from a 241.5 billion yen loss in the same period a year ago. Sales edged up 6 percent to 5.4 trillion yen (US$45 billion) from 5.1 trillion yen.
Shares of Matsushita Electric inched up 0.7 percent to close at 1,168 yen (US$9.80) on the Tokyo Stock Exchange Thursday, where trading ended shortly before the earnings were announced.