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Panasonic’s first-quarter profit nearly halves in China, the Rate of misery

TOKYO (Reuters) – Panasonic Corp reported a first-quarter operating profit that fell by almost half, as the Sino-US trade tensions dampened demand for the spare parts business in China and in the battery business with Tesla, Inc., remained in the red.

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

The market is a matter of dispute, making it more painful for Panasonic to implement its strategy of shifting its focus on business customers, and the automakers in consumer electronics, following its production, the delays already mentioned, the challenges for the goal.

The higher U.S. tariffs on Chinese goods are damaged, sales of Panasonic’s electronic device, while the falling car market in China prompted the auto industry to scale back production, investment and the price at the factory, and the sale of the units.

Automotive sales in China, the other fell and dampened the investment appetite” in the automotive industry, the company’s Chief Financial Officer, Hirokazu Osaka, said in an earnings briefing on Wednesday.

O also said that the Gigafactory joint venture with the US-based electric car maker is still in the process of ramping up to the planned annual production capacity of 35 gigawatt-hours and the associated costs are to be kept out of the Tesla’s battery business in the red.

Panasonic, the sole battery cell supplier for Tesla, reported an operating profit of 56.39 billion yen ($519.68 million) for the April-June, the city, and in 44% 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.

In the automotive industry, including automotive batteries, has reported a loss of 10 billion yen, more than a year before, a loss of 1.5 billion yen. It will generate up to 20% of the company’s total revenue.

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.

O, said weak sales of its Model S sedans and Model X Suvs have slowed down of battery shipments from Japan and will hurt profits.

Tesla’s shares fell last week after the car manufacturer has pushed back its profitability 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.

Reporting Makiko Yamazaki; Editing by Muralikumar Anantharaman

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