Panasonic Corp. said Monday it expects net profit to rise 27.2 percent to 210 billion yen ($1.9 billion) in the current business year through next March, helped by growth in its automotive segment that supplies electric vehicle batteries to U.S. giant Tesla Inc.
The expected recovery would follow a year in which the coronavirus pandemic has dented demand for Panasonic in-flight equipment with aircraft production stalled, sending total sales for fiscal 2020 below the 7 trillion yen mark for the first time in 25 years to 6.70 trillion yen. Net profit in the year ended March slumped 26.9 percent to 165.08 billion yen.
In fiscal 2021, sales are forecast to increase 4.5 percent to 7 trillion yen, according to the Osaka Prefecture-based company. Operating profit is expected to gain 27.6 percent to 330 billion yen, which compares with 258.60 billion yen in the previous year.
The automotive segment, one of the key growth areas for Panasonic, is expected to turn an operating profit of 50 billion yen in the current business year after becoming profitable in fiscal 2020.
Panasonic is ramping up production of batteries for Tesla at a time when EVs have gathered attention as momentum is growing globally for decarbonization.
"We have made (profit) forecasts for levels that we think are appropriate, taking into account surging raw material costs, such as for copper, as well as whether we can supply our products as chip supplies are very tight," Panasonic Chief Financial Officer Hirokazu Umeda told an online press briefing.
Panasonic has been shifting more resources to growing areas such as batteries and factory automation, while reviewing its unprofitable businesses.
Its TV business has been struggling amid competition with foreign rivals. Umeda said Panasonic has already halted TV production at its plants in India and Vietnam, as well as in Tochigi Prefecture, north of Tokyo.
In the past business year, Panasonic enjoyed strong sales of white goods, such as air conditioners, refrigerators and washing machines, benefiting from pandemic-fueled demand as people spent more time at home.
In the "connected solutions" segment that includes in-flight entertainment devices, sales tumbled 21 percent to 818.2 billion yen and the operating loss stood at 20.0 billion yen.
Panasonic recently decided to make U.S. software firm Blue Yonder Group Inc., which offers logistics solutions based on artificial intelligence and machine learning, a wholly owned subsidiary.