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Panasonic posts wider-than-expected 44 percent drop in first-quarter profit

TOKYO (Reuters) – the japanese Panasonic Corp reported on Wednesday a better-than-expected 44 percent drop in first-quarter operating profit, as a Sino-U.S. trade tensions, which dampened demand for its car parts and manufacturing equipment to China.

FILE PHOTO: A man is reflected on a Panasonic Corp’s logos at the Panasonic Center in Tokyo, Japan, February 2, 2017. REUTERS/Kim Kyung-Hoon/File Photo

Panasonic, the sole battery cell supplier for Tesla’s Inc. reported an operating profit of 56.39 billion yen ($519.68 million) for the April-June quarter, a decrease of 99.96 billion yen a year earlier.

This was under the consensus estimate of 70.93 billion yen by eight analysts compiled by Refinitiv.

Panasonic kept its profit forecast for the fiscal year ending in March on a 300 billion yen, against a consensus estimate of the 319.97 billion yen from 20 analysts.

The camera’s auto-part plant, and equipment companies, once seen as the next profit-pillars and after a shift from low-margin consumer electronics business, remained weak as the cost of the investment will be considered, and the question is, in China, has been delayed.

With the production delay, Tesla’s mass-market Model 3 is no, have slowed the recovery of Panasonic’s investment in battery production at its Gigafactory joint venture with the US-based electric car maker.

Tesla’s shares tanked last week after the electric-car maker, slid to its earnings timeline to be re-notified, lower margins-and announced the departure of its chief technology officer.

Panasonic has to be careful about the additional expenses on the ability of the growth of Tesla’s battery production, as it is going to have to start with a new battery joint venture with Toyota Motor Corporation.

Panasonic’s shares have halved since the end of the 2017, dragged down by concerns over a lack of growth, and the high sensitivity to the Model’s fortunes.

($1 = 108.5100 of yen)

Reporting Makiko Yamazaki; Editing by Muralikumar Anantharaman

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