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ANNOUNCEMENT OF FINANCIAL RESULTS

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FOR IMMEDIATE RELEASE Media Contacts: October 31, 2013 Investor Relations Contacts: Megumi Kitagawa (Japan) Hayato Wakabayashi (Japan) Global Public Relations Office Corporate Finance & IR Group (Tel:
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FOR IMMEDIATE RELEASE Media Contacts: October 31, 2013 Investor Relations Contacts: Megumi Kitagawa (Japan) Hayato Wakabayashi (Japan) Global Public Relations Office Corporate Finance & IR Group (Tel: ) (Tel: ) Panasonic News Bureau (Japan) (Tel: ) Jim Reilly (U.S.) (Tel: ) Yuko Iwatsu (U.S.) Panasonic Finance (America), Inc. (Tel: ) Hiroko Carvell (Europe) Panasonic Finance (Europe) plc Anne Guennewig (Europe) (Tel: ) (Tel: ) ANNOUNCEMENT OF FINANCIAL RESULTS PANASONIC REPORTS SECOND-QUARTER AND SIX-MONTH RESULTS - Profits Improved Significantly by Enhancing Earning Power, Revised Full Year Forecasts Upward - Osaka, Japan, October 31, Panasonic Corporation (Panasonic [TSE:6752]) today reported its consolidated financial results for the second quarter and six months ended September 30, 2013, of the current fiscal year ending March 31, 2014 (fiscal 2014). Consolidated Second-quarter Results Consolidated group sales for the second quarter increased by 3% to 1,881.8 billion yen compared with 1,823.7 billion yen for the second quarter of the year ended March 31, 2013 (fiscal 2013). Sales of digital consumer products including flat-panel TVs decreased with its severe global competition and weak demand. Focusing on profitability rather than sales volume was another factor for lower sales. Meantime, sales of automotive related business increased with global market recovery, and sales of housing business in Japan was stable. Yen depreciation also contributed to overall sales increase. Of the consolidated group total, domestic sales amounted to billion yen, down by 4% from billion yen a year ago. Overseas sales increased by 11% to billion yen from billion yen a year ago. During the second quarter under review, despite economic slowdown in some - 2 - emerging countries including India, the economy continued to expand in the U.S. and Japan, and to moderately recover in China and Europe. Under such business circumstances, Panasonic has been promoting four initiatives in a new group formation through its business division system to revitalize each business: eliminating unprofitable business, expanding business and improving efficiency by shifting from in-house approach, improving its financial position, and enhancing its growth strategy from customer s viewpoint. Reviewing its mobile phone business, Panasonic announced its suspension of new product development for smartphone carriers in Japan and strategically reallocate its operating resources such as mobile communication technology to new business and growing business areas. In healthcare business, Panasonic decided to transfer its shares of Panasonic Healthcare Co., Ltd., a consolidated subsidiary of Panasonic to PHC Holdings Co., Ltd., a company affiliated with the investment funds advised by Kohlberg Kravis Roberts & Co. L.P., since Panasonic concluded that expanding this business with the partner s knowledge and skills would be better than doing by its own. Operating profit 1 increased to 82.4 billion yen from 48.8 billion yen a year ago, due to group-wide fixed cost reduction, streamlining and positive impact of yen depreciation. Pre-tax income improved significantly to 84.8 billion yen from a loss of billion yen, recovering from a year ago when large business restructuring expenses occurred. Net income attributable to Panasonic Corporation also improved to 61.5 billion yen from a loss of billion yen, rebounding from fiscal 2013 when the increase in valuation allowances to deferred tax assets was recognized. Consolidated Six-month Results Consolidated group sales for six months ended September 30, 2013 increased by 2% to 3,706.3 billion yen, compared with 3,638.2 billion yen in the same period of fiscal Domestic sales amounted to 1,787.3 billion yen, down by 5% from 1,878.2 billion yen a year ago, while overseas sales increased by 9% to 1,919.0 billion yen, up from 1,760.0 billion yen a year ago. The company s operating profit for the first six months increased by 68% to billion yen, from 87.4 billion yen a year ago. In other income (deductions), one-off gain of 79.8 billion yen from pension scheme change was incurred in the first quarter ended 1 For information about operating profit, see Note 2 of the Notes to consolidated financial statements on page 12. - 3 - June 30, Accordingly, pre-tax income and net income attributable to Panasonic Corporation improved significantly to billion yen from a loss of billion yen, and to billion yen from a loss of billion yen, respectively. Consolidated Six-month Breakdown by Segment The company changed its group organization on April 1, 2013, resulting in the five reportable segments from eight. Accordingly, segment information for fiscal 2013 has been reclassified to conform to the presentation for fiscal The company s six-month consolidated sales and profits by segment with previous year comparisons are summarized as follows: Appliances Sales increased by 5% to billion yen, compared with billion yen a year ago. This was due mainly to positive effect of yen depreciation although sales in most products were disappointing especially in household air conditioners in China. Segment profit decreased by 40% to 17.2 billion yen, compared with 28.7 billion yen a year ago. This was due mainly to the negative impact of yen depreciation which could not be offset by implementation of streamlining and cost reduction. Eco Solutions Sales increased by 7% to billion yen from billion yen a year ago, due mainly to favorable sales in Energy Systems Business Unit (BD) and Housing Systems BD from a surge in consumer spending before the consumption tax hike in Japan. Segment profit increased significantly by 110% to 41.4 billion yen from 19.7 billion yen a year ago due mainly to sales increase and cost reduction despite negative impact of yen depreciation. AVC Networks Sales decreased significantly by 9% to billion yen from billion yen a year ago. This result was due mainly to sales decline in digital consumer related business including TVs, DSCs and mobile phones, and eliminating unprofitable product models. Segment loss was 16.5 billion yen worsened from 13.2 billion yen a year ago due mainly to sales decrease despite panel business improvement. - 4 - Automotive & Industrial Systems Sales increased by 6% to 1,355.9 billion yen from 1,277.9 billion yen a year ago. Sales increased due mainly to positive impact of yen depreciation and sales growth in automotive related business including automotive infotainment systems with car makers stable automotive production overseas. Segment profit significantly increased by 108% to 58.2 billion yen from 28.0 billion yen a year ago due mainly to sales increase. Other Sales decreased by 10% to billion yen from billion yen a year ago due mainly to the SANYO-related business transfers implemented in the fiscal Segment profit was 5.4 billion yen compared with a loss of 6.4 billion yen a year ago. Consolidated Financial Condition Net cash provided by operating activities for six months ended September 30, 2013 amounted to billion yen, an increase of billion yen from a year ago due mainly to increase in operating profit and curbing increasing inventories. Net cash used in investing activities amounted to 46.3 billion yen, a decrease of 33.6 billion yen from a year ago. This was due mainly to decrease in capital expenditures, despite decrease in proceeds from disposals of property, plant and equipment. Net cash used in financing activities amounted to billion yen, an increase of billion yen from a year ago due mainly to decrease in short-term bonds balance. Taking into consideration exchange rate fluctuations, cash and cash equivalents totaled billion yen as of September 30, 2013, down 37.7 billion yen, compared with the end of the fiscal The company s consolidated total assets as of September 30, 2013 decreased by 54.6 billion yen to 5,343.2 billion yen from March 31, This was due mainly to decrease in cash and cash equivalents, and property, plant and equipment, despite yen depreciation and seasonal increase in inventories. The company s consolidated total liabilities as of September 30, 2013 decreased by billion yen to 3,836.1 billion yen from March 31, This was due mainly to reducing interest-bearing debt including short-term bond maturity, and decrease in retirement and severance benefits. Panasonic Corporation shareholders equity increased by billion yen, compared with March 31, 2013, to 1,467.0 billion yen. This was due mainly to incurring net - 5 - income and improvement in accumulated other comprehensive income (loss) along with yen depreciation. Adding Noncontrolling interests to Panasonic Corporation shareholders equity, total equity was 1,507.1 billion yen. Interim and Year-end Dividend As dividend forecast was announced on August 29, 2013, the Board of Directors of the company resolved today to distribute an interim (semiannual) cash dividend of 5.0 yen per common share to shareholders of record as of September 30, 2013, payable December 5, The year-end dividend has not been decided. Forecast for Fiscal 2014 Regarding full year forecast for fiscal 2014, the company revised its original sales forecast of 7,200.0 billion yen upward to 7,400.0 billion yen, due mainly to positive effect of yen depreciation and sales increase expected in stable housing and automotive related businesses, despite of sales decline in digital consumer related business including TVs, DSCs and mobile phones. The company revised operating profit forecast of billion yen upward to billion yen, due mainly to sales increase. In other income (deductions), the company recognizes its gain from sale of share transfer of Panasonic Healthcare Co., Ltd. agreed on September 27, 2013 as a nonoperating profit, while it expects to incur additional expenses from accelerated restructuring. Taking all these facts into consideration, the company revised pre-tax income forecast of billion yen upward to billion yen, and net income attributable to Panasonic Corporation forecast of 50.0 billion yen upward to billion yen, respectively. Net income attributable to Panasonic Corporation, per share is anticipated to be yen, compared with the previous forecast of yen. Panasonic Corporation is one of the world's leading manufacturers of electronic and electric products for consumer, business and industrial use. Panasonic s shares are listed on the Tokyo and Nagoya stock exchanges. For more information, please visit the following web sites: Panasonic home page URL: Panasonic IR web site URL: - 6 - Disclaimer Regarding Forward-Looking Statements This press release includes forward-looking statements (that include those within the meaning of Section 21E of the U.S. Securities Exchange Act of 1934) about Panasonic and its Group companies (the Panasonic Group). To the extent that statements in this press release do not relate to historical or current facts, they constitute forward-looking statements. These forwardlooking statements are based on the current assumptions and beliefs of the Panasonic Group in light of the information currently available to it, and involve known and unknown risks, uncertainties and other factors. Such risks, uncertainties and other factors may cause the Panasonic Group's actual results, performance, achievements or financial position to be materially different from any future results, performance, achievements or financial position expressed or implied by these forward-looking statements. Panasonic undertakes no obligation to publicly update any forward-looking statements after the date of this press release. Investors are advised to consult any further disclosures by Panasonic in its subsequent filings under the Financial Instrument and Exchange Act of Japan (the FIEA) and other publicly disclosed documents. The risks, uncertainties and other factors referred to above include, but are not limited to, economic conditions, particularly consumer spending and corporate capital expenditures in the United States, Europe, Japan, China and other Asian countries; volatility in demand for electronic equipment and components from business and industrial customers, as well as consumers in many product and geographical markets; currency rate fluctuations, notably between the yen, the U.S. dollar, the euro, the Chinese yuan, Asian currencies and other currencies in which the Panasonic Group operates businesses, or in which assets and liabilities of the Panasonic Group are denominated; the possibility of the Panasonic Group incurring additional costs of raising funds, because of changes in the fund raising environment; the ability of the Panasonic Group to respond to rapid technological changes and changing consumer preferences with timely and cost-effective introductions of new products in markets that are highly competitive in terms of both price and technology; the possibility of not achieving expected results on the alliances or mergers and acquisitions including the business reorganization after the acquisition of all shares of Panasonic Electric Works Co., Ltd. and SANYO Electric Co., Ltd.; the ability of the Panasonic Group to achieve its business objectives through joint ventures and other collaborative agreements with other companies; the ability of the Panasonic Group to maintain competitive strength in many product and geographical areas; the possibility of incurring expenses resulting from any defects in products or services of the Panasonic Group; the possibility that the Panasonic Group may face intellectual property infringement claims by third parties; current and potential, direct and indirect restrictions imposed by other countries over trade, manufacturing, labor and operations; fluctuations in market prices of securities and other assets in which the Panasonic Group has holdings or changes in valuation of long-lived assets, including property, plant and equipment and goodwill, deferred tax assets and uncertain tax positions; future changes or revisions to accounting policies or accounting rules; as well as natural disasters including earthquakes, prevalence of infectious diseases throughout the world, disruption of supply chain and other events that may negatively impact business activities of the Panasonic Group. The factors listed above are not all-inclusive and further information is contained in the most recent English translated version of Panasonic s securities reports under the FIEA and any other documents which are disclosed on its website. (Financial Tables and Additional Information Attached)
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