Panasonic (IW 1000/30) on May 11 posted a record $9.67 billion annual loss as one of Japan's flagship companies was hammered by a strong currency, natural disasters and stiff competition from foreign rivals.
The $9.67 billion shortfall, one of the worst-ever losses for a non-financial Japanese firm, comes as the consumer electronics giant reshuffles its boardroom and overhauls its business in a bid to return to profitability.
The result was slightly better than the $9.76 billion net loss that the Osaka-based company had earlier forecast, but its shares plumbed 30-year lows, falling 1.55% to $7.14 on May 11.
"This result was due mainly to price declines and the appreciation of the yen, in addition to a sales decrease affected by the Great East Japan Earthquake and the flooding in Thailand," the company said in a statement.
A slump in sales of television sets weighed on Panasonic's performance as it suffered a $849 million operating loss in its digital products business, compared with the profit of $342 million a year earlier.
Panasonic president Fumio Ohtsubo, who had previously announced he would step down amid the massive losses, conceded that the firm's earlier television business strategy was off the mark.
"We had invested a huge amount in 2006 and 2008 in the panel and TV businesses, but many changes occurred" since then, Ohtsubo told a news briefing in Tokyo.
"We realized that it was excessive investment...We have to remember this experience in the future."
Despite the shortfall, Panasonic projected it would return to the black in the current fiscal year through March 2013 with a net profit of $626 million.
"Although the company expects some risks to continue, the global economy is expected to show a slow recovery in fiscal 2013," the firm said.
The latest results stand in stark contrast to Panasonic's net profit of $927 million in the year to March 2011, and its first forecast for the current year, which was for a $376 million profit.
"We've undertaken an unprecedented level of restructuring," Takumi Kajisha, senior managing executive officer, told a news conference, according to Dow Jones Newswires.
"No matter what, we will achieve a V-shaped recovery."
But Hiroshi Sakai, chief economist at SMBC Friend Research Center, warned Panasonic and other Japanese electronics giants should not be "too optimistic" about a recovery this year.
"Japanese electronics companies are likely to show moderate recovery from the tough year, but whether they can achieve a V-shaped recovery depends on how they can redefine their own core businesses," Sakai said.
"They have to drop unprofitable businesses, concentrate on profitable ones and revamp their entire business structure," he said.
Panasonic, like its rival Sony (IW 1000/33) which posted a record $5.7 billion loss on May 10, has long suffered major losses in its television business and its debt soared due to the purchase of smaller rival Sanyo (IW 1000/200).
A torrid year for the firm, Japan's third-largest mobile handset manufacturer behind Sharp (IW 1000/120) and Fujitsu (IW 1000/60), saw it downgraded by two credit ratings agencies and announce a plan to reduce head count by 17,000 people.
Japan's electronics sector has been badly hit by the appreciation of the yen, which makes exporters' products less competitive overseas, while falling prices and slow demand at home have also eaten into profits.
Competitors including South Korea's Samsung and U.S.-based Apple (IW 500/14) have offered up stiff competition, with high resolution display technology a key battleground as demand intensifies for smartphones, tablet computers and other gadgets.
Panasonic has announced a major restructuring of its liquid crystal display manufacturing division, and is reportedly considering shifting all of its mobile phone handset production overseas amid high costs at home.
Copyright Agence France-Presse, 2012