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Panasonic reports quarterly loss on quake, tsunami

Thu, 07/28/2011 - 8:00am
Yuri Kageyama, AP Business Writer

TOKYO (AP) – Panasonic slumped to a 30.4 billion yen ($389 million) quarterly loss, hit by lower sales after the earthquake in northeastern Japan, and announced the sale of part of its refrigerator and washing machine business to Chinese rival Haier.

Panasonic Corp., which makes Viera TVs and Lumix cameras, said Thursday the deal for Haier Group to buy the Sanyo brand home appliances businesses in Japan and Southeast Asia is set to be completed by March 2012.

It did not give a value for the deal. It would be the first large-scale acquisition of a major Japanese home appliance business by a Chinese company, and highlights a key shift in the industry - with the spotlight on a rising China.

Panasonic is in the middle of streamlining its businesses and cutting jobs this year after acquiring Sanyo Electronics Co.

Some Panasonic and Sanyo products, including refrigerators and washing machines, overlap. Panasonic has said it hopes to focus on relatively new areas such as solar panels and expensive gadgets. More changes are in the works to avoid overlap with Sanyo, said Makoto Uenoyama, a company executive.

Panasonic maintained its forecast for a 30 billion yen ($385 million) profit for the fiscal year ending March 2012, which would be about half the profit for the previous year.

It had chalked up a 43.7 billion yen profit for the April-June period the previous year.

Like other Japanese manufacturers, Panasonic suffered a huge setback from the March 11 earthquake and tsunami that devastated the northeastern coast and killed more than 22,000 people.

Consumer spending has dropped amid national mourning over the disaster. The tsunami also sent a nuclear power plant into meltdown, spewing radiation into the air and water and contaminating beef, vegetables and other products, further crimping spending.

Panasonic's quarterly sales dropped 11 percent to 1.93 trillion yen ($25 billion), mainly because of the earthquake, the Osaka-based manufacturer said. Sales were down in flat-panel TVs, auto electronics, cell phones and devices, it said.

Sales were down not only in Japan but also in Europe and the U.S.

Air conditioner sales in Japan were one exception because of worries about a power crunch caused by the nuclear crisis. Consumers have been snatching up energy efficient appliances.

A strong yen also hurt Panasonic, erasing 19 billion yen ($244 million) from its operating profit for the latest quarter.

Haier Vice President Du Jingguo welcomed the Sanyo deal, calling it an "important milestone for both companies."

Haier has been trying to expand its business in Japan but struggled to woo finicky Japanese consumers and remains a small player, unlike in the rest of the world.

Under the deal, Haier will acquire a range of Sanyo businesses, including washing machines, refrigerators, air-conditioners, microwaves, vacuum cleaners, rice-cookers, coffee-makers, juicers, toasters and irons in Japan, Indonesia, Malaysia, the Philippines and Vietnam, it said in a statement.

"Haier aims to be a leader in the global white goods business," said Du.

"Acquiring the white goods business of Sanyo is an important part of Haier's overall growth strategy," he said.

Sanyo said the deal will ensure employees have jobs and that consumers will continue to enjoy Sanyo products.

Panasonic officials said they were confident about competing because of Panasonic's strengths in more sophisticated gadgets and ecological technology.

Panasonic stock inched up 0.5 percent to close at 929 yen in Tokyo, where trading ended before earnings were announced.

– AP Business Writer Joe McDonald in Beijing contributed to this report

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