Panasonic Corp slashed its full-year earnings estimates to write down billions of yen of goodwill from past acquisitions in mobile phones and solar panels, a sign that its new president is scaling back businesses that do not add to the bottom line amid weak demand.
The maker of Viera TVs predicted an annual net loss of 765 billion yen (5.9 billion pounds) versus an earlier estimate for a 50 billion yen profit. It saw operating profit at 140 billion yen compared with a forecast in July of 260 billion yen.
With the revisions, Panasonic, founded in 1918, is heading for a fourth net loss in five years following a record net loss of 772 billion yen last business year. In the past four years, the company's losses have mounted to more than $15 billion (9 billion pounds).
Panasonic's decision to write off the goodwill and add to restructuring costs amid weak global demand for its products comes as its new boss, Kazuhiro Tsuga, prepares to clean house with a fresh revival plan before the business term ends next March.
He has promised to weed out the sprawling electronics conglomerate's loss-making or low-profit businesses. Even after a 36,000 reduction in its workforce last year, Panasonic remains Japan's largest corporate employer with 330,000 workers.
Panasonic on Wednesday said it will write off 238 billion yen in goodwill related to its mobile phone unit and its businesses in solar panels and small lithium batteries. Tsuga will halt sales of smartphones in Europe after returning to the market this year, a source with knowledge of the decision told Reuters this month.
In the three months to September 30, Panasonic posted an operating profit of 48.8 billion yen compared with a profit of 42 billion yen a year ago. The result was lower than the average 55.6 billion yen profit estimated by five analysts surveyed by Thomson Reuters I/B/E/S.
As it prepares for a revamp, Panasonic this month secured $7.6 billion of loan commitments from Sumitomo Mitsui Financial Group, Mitsubishi UFJ Financial Group and other banks, that will allow it to sidestep fund-raising in the credit markets.
Moody's Investors in September cut its rating on Panasonic two notches to Baa1 citing a low level of profitability and elevated leverage.
Since the start of the year Panasonic's shares have dropped more than 20 percent compared with a more than 5 percent gain in the benchmark Nikkei 225. Panasonic shares rose 4.5 percent on Wednesday to close at 514 yen before it released its results for the quarter.
(Reporting by Tim Kelly; Editing by Edmund Klamann and Edwina Gibbs)