OSAKA -- The stronger Japanese currency likely will push Panasonic to lower its full-year group operating profit estimate to around 280 billion yen ($2.67 billion), about 10% below the company's standing projection of 310 billion yen for the year ending in March.
The major Japanese consumer electronics maker projected a 35% profit increase based on International Financial Reporting Standards, but a downgrade to 280 billion yen translates to 20% profit growth. The company used U.S. accounting standards in the previous year.
Panasonic is seen downgrading its full-year earnings guidance when the company announces April-September results Monday. The company's assumed exchange rate for the current year probably will be reduced from 115 yen to the dollar to around 100 yen. Every 1 yen appreciation of the Japanese currency against the greenback shrinks Panasonic's annual operating profit by 1 billion yen.
The company anticipated a small dip in sales for the current year, but Panasonic appears headed for a slightly worse decline of 4% or so to between 7.3 trillion yen and 7.4 trillion yen.
In Japan, Panasonic has enjoyed solid demand for refrigerators and other white goods, but the solar power equipment business is underperforming. Research and development spending and upfront investment in automotive devices, which the company positions as a growth area, likely will exceed company plans.
The Chinese operations for electronic parts and air conditioning have struggled, while home appliance sales have been sluggish in Europe. Full-year net profit now looks likely to miss the 145 billion yen forecast.
Panasonic in March withdrew its goal of raising sales to 10 trillion yen in the year through March 2019, saying it would focus more on increasing profit than bolstering business scale. But the expanded overseas business exposure means that the company's earnings are more prone to currency exchange rate fluctuations than before.