Panasonic Jumps Most in 38 Years on Surprise Profit

Panasonic Corp., Japan’s biggest television-maker after Sony Corp., rose the most in more than 38 years in Tokyo trading after posting an unexpected profit because of a weaker yen, asset sales and job cuts.

The company surged by its daily limit of 100 yen, or 17 percent, the biggest gain since at least September 1974, to 692 yen in Tokyo. Net income was 61 billion yen ($658 million) in the three months ended Dec. 31, the company said Feb. 1. Analysts expected a 17 billion yen loss, based on the average of three estimates compiled by Bloomberg.

The TV-maker and Sharp Corp. both reported improved results in the quarter as the yen’s plunge boosted the value of overseas sales. Osaka-based Panasonic has also eliminated more than 38,000 jobs since April to cut costs amid a projected second straight annual loss, slower TV demand and competition from Samsung Electronics Co.

“Panasonic seems to have turned a corner,” said Masamitsu Ohki, a fund manager at Stats Investment Management Co., a Tokyo-based hedge fund. “That is easing investor concerns about its survival.”

Japanese exporters led gains in Tokyo trading after the yen weakened to the lowest level since 2010 versus the dollar and euro.

Sony, scheduled to report earnings Feb. 7, surged 7.5 percent to 1,457 yen, the highest close since April 12. The company will announce a new PlayStation 4 game console at a Feb. 20 event, according to Michael Pachter, an analyst with Wedbush Securities in Los Angeles.

Panasonic Turnaround

Sharp, Japan’s third-biggest television maker, gained 5.5 percent to 347 yen, the highest close since July 11. The company reported its first operating profit in five quarters on Feb. 1.

Panasonic, which also makes hair dryers, refrigerators and car-navigation systems, is scheduled to announce a new medium- term plan by the end of March. Kazuhiro Tsuga, who was promoted to president in June, has said the company may pull out of businesses with operating margins of less than 5 percent by March 2016.

The company reiterated its forecast for a full-year loss of 765 billion yen.

The TV-maker has already announced plans to cut 8,000 jobs in the six months ending March 31. Its workforce shrank to 321,896 as of Sept. 30, from about 385,000 two years earlier. Other turnaround measures include ending smartphone sales in Europe, closing domestic plants for lithium-ion power cells and suspending investment for solar-cell facilities in Malaysia.

Cutting Costs

Panasonic’s results beat the consensus, “thanks to a bigger-than-expected impact from cost-cutting,” Shunsuke Tsuchiya, a Tokyo-based analyst at Credit Suisse Group AG, wrote in a report. “There is a limit to what can be achieved by cost- cutting alone. We look forward to seeing specific measures to combat the decline in sales.”

Shutting divisions is a “worst-case” scenario, and the company will try to safeguard jobs whether units are sold, restructured or closed, Tsuga said last month. He didn’t elaborate on which operations may close.

In October, the company said it will generate 110 billion yen in cash from selling assets by March 31. It also intends to boost appliance sales outside Japan, strengthen its business making home-energy management systems and to offer more products for corporate customers.

(Source: Bloomberg)