By Isabel Reynolds
(Reuters) - Japanese electronics maker Panasonic Corp forecast an annual net loss of 420 billion yen ($5.5 billion), its biggest in a decade, as restructuring costs ballooned, and a soaring yen and weak demand in the United States and Europe eroded income.
Panasonic accelerated the pace of restructuring as it races to shake off losses at its TV unit -- a problem it shares with rival Sony -- and strips out overlapping businesses after its buyout of subsidiary Sanyo.
In April, Panasonic said it would cut 17,000 jobs by March 2013, but the maker of Viera televisions and Lumix cameras announced on Monday it now expects to reach its goal of slimming its work force to 350,000 or fewer a year ahead of schedule.
Panasonic said it will stop liquid-crystal panel production at its Mobara plant near Tokyo and is canceling its plans to ship plasma-panel manufacturing equipment to Shanghai to start production there as it aims to turn a profit on TVs in its next fiscal year.
"The net loss of 420 billion yen includes an increase in the cost of restructuring. It has lowered the assumed exchange rates to 76 yen, which gives the company some buffer even if the dollar slips from the current level after today's intervention," said Hiroyuki Fukunaga, CEO of Investrust.
"So even though it is reporting a loss, the market may think all the negative factors have been priced in, especially given that its share price has fallen about a third from around 1,200 yen at the beginning of this year."
Japan sold the yen for the second time in less than three months after it hit another record high against the dollar on Monday, intervening to counter speculation that officials say is hurting the world's No. 3 economy.
The soaring yen is making it ever harder for Panasonic to compete with the likes of Samsung Electronics.
The quarterly loss, which will be its second biggest ever, compares with the company's previous forecast for a net profit of 30 billion yen in the year to March 2012 and last year's net profit of 74 billion yen.
Shares of the company closed 2.1 percent lower before the results. They have fallen 31 percent so far this year, compared with a 13 percent decline in the broader market.
'BIRTH PANGS OF NEW STRATEGY'
"What we need to tackle is the television and related semiconductor businesses," Chief Financial Officer Makoto Uenoyama told reporters.
"If we downsize these, our profits will be completely different," he added, calling the forecast losses "the birth pangs of switching to a new strategy."
The company cut its full-year operating profit forecast to 130 billion yen from 270 billion yen.
That is far below market expectations of a 225 billion yen profit, based on the average estimate of 21 analysts polled by Thomson Reuters I/B/E/S.
It also slashed its estimate for annual TV sales to 19 million sets from 25 million.
Sony said on Monday it will split its television business into three divisions to make operations more accountable as part of efforts to turn around the loss-making business.
For July-September, Panasonic reported an operating profit of 42 billion yen, beating its own forecast of 4.4 billion yen profit, but falling short of analysts' average estimate of 50 billion yen. It had reported an operating profit of 85.2 billion yen a year earlier.
For the remainder of the business year, Panasonic estimates a dollar-yen rate of 76 yen and a rate of 105 yen against the euro.
($1 = 75.760 Japanese yen)
(Additional reporting by Hideyuki Sano, Writing by James Topham; Editing by Vinu Pilakkott)
Copyright 2011 Thomson Reuters. Click for Restrictions.
Our 2024 Coverage Needs You
It's Another Trump-Biden Showdown — And We Need Your Help
The Future Of Democracy Is At Stake
Our 2024 Coverage Needs You
Your Loyalty Means The World To Us
As Americans head to the polls in 2024, the very future of our country is at stake. At HuffPost, we believe that a free press is critical to creating well-informed voters. That's why our journalism is free for everyone, even though other newsrooms retreat behind expensive paywalls.
Our journalists will continue to cover the twists and turns during this historic presidential election. With your help, we'll bring you hard-hitting investigations, well-researched analysis and timely takes you can't find elsewhere. Reporting in this current political climate is a responsibility we do not take lightly, and we thank you for your support.
Contribute as little as $2 to keep our news free for all.
Can't afford to donate? Support HuffPost by creating a free account and log in while you read.
The 2024 election is heating up, and women's rights, health care, voting rights, and the very future of democracy are all at stake. Donald Trump will face Joe Biden in the most consequential vote of our time. And HuffPost will be there, covering every twist and turn. America's future hangs in the balance. Would you consider contributing to support our journalism and keep it free for all during this critical season?
HuffPost believes news should be accessible to everyone, regardless of their ability to pay for it. We rely on readers like you to help fund our work. Any contribution you can make — even as little as $2 — goes directly toward supporting the impactful journalism that we will continue to produce this year. Thank you for being part of our story.
Can't afford to donate? Support HuffPost by creating a free account and log in while you read.
It's official: Donald Trump will face Joe Biden this fall in the presidential election. As we face the most consequential presidential election of our time, HuffPost is committed to bringing you up-to-date, accurate news about the 2024 race. While other outlets have retreated behind paywalls, you can trust our news will stay free.
But we can't do it without your help. Reader funding is one of the key ways we support our newsroom. Would you consider making a donation to help fund our news during this critical time? Your contributions are vital to supporting a free press.
Contribute as little as $2 to keep our journalism free and accessible to all.
Can't afford to donate? Support HuffPost by creating a free account and log in while you read.
As Americans head to the polls in 2024, the very future of our country is at stake. At HuffPost, we believe that a free press is critical to creating well-informed voters. That's why our journalism is free for everyone, even though other newsrooms retreat behind expensive paywalls.
Our journalists will continue to cover the twists and turns during this historic presidential election. With your help, we'll bring you hard-hitting investigations, well-researched analysis and timely takes you can't find elsewhere. Reporting in this current political climate is a responsibility we do not take lightly, and we thank you for your support.
Contribute as little as $2 to keep our news free for all.
Can't afford to donate? Support HuffPost by creating a free account and log in while you read.
Dear HuffPost Reader
Thank you for your past contribution to HuffPost. We are sincerely grateful for readers like you who help us ensure that we can keep our journalism free for everyone.
The stakes are high this year, and our 2024 coverage could use continued support. Would you consider becoming a regular HuffPost contributor?
Dear HuffPost Reader
Thank you for your past contribution to HuffPost. We are sincerely grateful for readers like you who help us ensure that we can keep our journalism free for everyone.
The stakes are high this year, and our 2024 coverage could use continued support. If circumstances have changed since you last contributed, we hope you'll consider contributing to HuffPost once more.
Support HuffPostAlready contributed? Log in to hide these messages.