Panasonic reports profit fall, sticks to forecasts

[October 28, 2008]  TOKYO (AP) -- Panasonic's quarterly profit slumped 16 percent as a strong yen, declining gadget prices and rising material costs chipped away at the Japanese electronics maker's earnings.

But Panasonic Corp. stuck to its forecasts Tuesday for the fiscal year ending March 2009, while acknowledging it was leery of what the U.S. financial crisis may bring for exchange rates, stock prices and global consumer spending.

A strong yen erodes the value of Japanese exporters' overseas earnings. The dollar has slipped from about 107 yen last month to nearly 90 yen recently, as jitters about a credit crunch, corporate failures and a global stock plunge set off gyrating currency-rate swings.

Osaka-based Panasonic has fared relatively better against the hammering from the strengthening yen than have some Japanese rivals, such as Sony Corp., which depends more on overseas sales. Sony was forced to drastically lower its profit forecast for the fiscal year last week

Panasonic racked up a group net profit of 55.46 billion yen ($596 million) for the July-September quarter, down from 65.81 billion yen the same period the previous year. Sales in the fiscal second quarter slipped 4 percent on year to 2.192 trillion yen ($23.6 billion) from 2.286 trillion yen.

Panasonic's sales were healthy in digital gadgets, such as flat-panel TVs and DVD recorders, as well as home appliances, it said in a release. But that wasn't enough to offset the damage from intensifying price competition and the rising costs of energy and raw materials, according to the company.

Panasonic, which changed its name from Matsushita Electric Industrial Co. on Oct. 1, is expecting a 310 billion yen ($3.3 billion) profit on 9.2 trillion yen ($98 billion) sales for the fiscal year ending March 31, 2009.

Panasonic also said the elimination of sales of Victor Co. of Japan after Panasonic reduced its stake in the company and its subsidiaries also pushed down results for the latest quarter.

Last week, Sony drastically lowered its forecast for the year ending March 2009 to 150 billion yen ($1.6 billion) profit from an earlier 240 billion yen ($2.6 billion) profit projection. Sony reports earnings Wednesday.

Panasonic shares gained 12 percent to 1,406 yen ($15) in Tokyo. Panasonic earnings were announced shortly after trading ended in Tokyo.

[Associated Press; By YURI KAGEYAMA]

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