Panasonic will cut costs as earnings fall in third quarter

City A.M. Reporter
PANASONIC is planning further cost cuts to compete with South Korean rivals including Samsung, after stiff price competition in televisions and a stronger yen hurt its quarterly profit.

Panasonic reported an operating profit of 95.36bn yen (£700m) for October to December, lagging an average forecast of 109.1bn yen. The maker of Viera TVs and Lumix cameras left its full-year operating profit outlook at 310bn yen. Operating profit for the year to March 2010 was 190bn yen. Higher material costs also contributed to the 5.6 per cent fall in third-quarter earnings, offsetting help from a Japanese government incentive scheme during the year-end period.

Panasonic, the world’s fourth-largest television maker after Samsung, LG Electronics and Sony, is struggling to gain a foothold in smartphones and tablets, a market dominated by Apple. “The yen gets stronger and stronger and competition with Korean and Chinese makers will get fiercer and fiercer,” managing director Makoto Uenoyama (pictured) said.

Investors are eyeing Panasonic’s ability to restructure quickly and show benefits after its buyout of subsidiary Sanyo Electric.