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Business

Panasonic to start strategic spending a year ahead of schedule

OSAKA -- Panasonic will begin strategically investing in new sectors a year earlier than planned, with an eye on bulking up overseas, President Kazuhiro Tsuga told The Nikkei.

     The company has dramatically restructured since the year ended March 2013, when it logged a second consecutive net loss exceeding 750 billion yen ($6.5 billion). Tsuga said in an interview Thursday that the overhaul put Panasonic on the road to recovery, but added that it is just beginning to "climb another mountain" in developing the housing and auto businesses.

     Panasonic raised its consolidated operating profit projection to 350 billion yen for this fiscal year, a 15% increase and its highest tally since the global financial crisis. "Our cost structure has unmistakably improved," Tsuga said. The company abandoned plasma televisions and sold multiple chip assembly plants to stem the flow of red ink from slumping businesses.

     "Starting next fiscal year, we'll conduct strategic investment separate from our capital investment, and we won't put a cap on it. Mergers and acquisitions are also a big option for us," the president said.

     Tsuga added, "If we try to grow only in our existing fields, we'll only be able to raise consolidated sales to around 8 trillion yen." Sales last fiscal year totaled 7.73 trillion yen. By moving the start of strategic investment from fiscal 2016 to fiscal 2015, the company is aiming for consolidated sales of 10 trillion yen in fiscal 2018.

     One recent investment in a Spanish autoparts maker was on the scale of 20 billion yen. But Tsuga noted, "When we do strategic investment, we'll likely make acquisitions of over 100 billion yen."

     Of the company's change in direction, he offered this analogy, "The mountains we must climb are housing and automobiles. We will not climb mountains well-known to the electrical industry. We will supply low-cost, high-quality housing in Asia, and we'll seek a partner to become a tier 1 supplier in the automotive sector."

     The plan is to raise combined sales from the two fields from the current 2.5 trillion yen range to 4 trillion yen by fiscal 2018. Tsuga detailed the strategy for each field. In housing, the company has focused almost solely on its domestic business, but it will now cultivate the Asian market. And in automobiles, it will forge direct dealings with carmakers for its advanced driver assistance system business.

     "We'll essentially make a second Panasonic overseas, on par with our company in Japan," Tsuga said. "Our old way of thinking was to mass-produce the same product for sale, but we'll rethink that as well."

     Tsuga said Panasonic will also change the way it develops products and acquires parts, as its methods are heavily centered on Japan. These changes will be crucial because it must quickly discern the needs of clientele in various regions to make up for its delayed globalization.

     Panasonic will first establish a home appliance company in Malaysia in April.

(Nikkei)

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