Panasonic Corp. said Friday it will slash investment in flat televisions and exit unprofitable businesses, joining other Japanese electronics makers in downsizing to cope with the economic downturn. The electronics giant said it would reduce investment in two television panel plants to 445 billion yen ($4.9 billion), from a previously expected 580 billion yen.
The company, which has enjoyed brisk sales of plasma televisions, mobile telephones and digital cameras in recent years, said it would undertake "drastic structural reforms" to streamline its operations. It plans to close down overseas operations and business programmes that are losing money, although details of the overhaul have not yet been decided.
Panasonic is also in the midst of a $9-billion takeover of Japanese rival Sanyo, hoping that ythe transformation into one of the world's biggest electronics companies will help it weather the current tough business environment. (See: Panasonic to acquire Sanyo for $9 billion)
"The current situation is not just a simple economic slump. Global demand is shrinking and shifting to the emerging markets," Panasonic president Fumio Ohtsubo told a media conference. "We cannot expect an easy recovery. We must focus our efforts on structural reform, strengthening our company, and prepare for future growth."
But the world's largest plasma TV maker said it also aims to boost its flat TV unit sales by 50 per cent next business year to cement its position, though rivals such as No. 2 Samsung Electronics Co and third-ranked LG Electronics Inc are also targeting bold growth.
Panasonic aims to sell 15.5 million plasma and liquid crystal display (LCD) TVs in the year starting in April, up from estimated 10.3 million units in 2008/09 as it plans to increase line-ups and expand sales channels. LG said it aims to raise its LCD TV sales by 50 per cent to 18 million sets this year and its plasma TV sales by 7-25 per cent to 3-3.5 million units. Samsung, which ranks No. 1 in LCD TVs and second in plasma TVs, targets to sell at least 26 million flat-screen TVs in 2009.
"We will aim for a bigger growth than the industry as we cope with a slowdown in the market," said Ohtsubo. "We will carefully follow the market trend, we hope to win the cut-throat competition. We will not consider the planned cut in investment as a negative move."
The company will continue its efforts to expand international sales, especially in the emerging markets and Europe, where the firm is introducing white goods for the first time. "Asia is the only one area in the world where we can expect to see sales that will be as good or almost as good as last year," he said.
Japan's electronics giants are facing tougher times after enjoying several years of strong profits, as consumers tighten their purse strings amid recessions in major economies from the US to Japan and Europe. Japanese icon Sony Corp. last month announced plans to slash about 16,000 jobs and shut plants to cope with the fallout from the financial crisis. (See: Sony cuts 16,000 jobs, shuts plants to save $1.1 billion)