OSAKA -- Panasonic's retreat from LCD panels for televisions underscores how the Japanese electronics giant is prioritizing earnings as it negotiates increasingly unforgiving terrain.
The company bled more than 1.5 trillion yen ($13.5 billion) in net losses over the two years ended March 2013, forcing a sweeping restructuring that included factory shutdowns and business pullouts. No plant or operation was spared scrutiny.
These overhaul efforts bore fruit in the fiscal year ended March 2014, with net profit exceeding 100 billion yen. Panasonic then turned its attention to acquisitions and new operations.
The tide shifted last fall when the business environment took a turn for the worse amid the global economic slowdown. Panasonic rang up sales of 7.55 trillion yen in fiscal 2015, undershooting its initial forecast of 8 trillion yen.
While a direct comparison cannot be made because Panasonic is switching to International Financial Reporting Standards this fiscal year, net profit will likely sink 9% from the fiscal 2015 result recalculated in IFRS. The company has even abandoned a group sales target of 10 trillion yen in fiscal 2018.
"The ability to cope with the shifting environment had been an issue," President Kazuhiro Tsuga has said. Panasonic seeks to regain its footing and aim for steady growth rather than recklessly pursue scale. Withdrawing from LCD TV panels is arguably the first step. Solar power and computer batteries are among other underperforming businesses, and pulling out of such operations is apparently on the table.