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Panasonic shares are up only five per cent since the start of the year, hurt by fears about EV sales and U.S. tariffs
By Yuki Furukawa
Panasonic Holdings Corp. is slashing headcount by 10,000, or more than 4 per cent, part of a push to cull non-growth operations and boost profitability.
The supplier of lithium-ion batteries to Tesla Inc. said the job cuts target 5,000 employees in Japan and 5,000 overseas and would take place mostly in the current fiscal year. The company expects about ¥130 billion (US$895 million) in restructuring charges in the year to March.
The personnel cuts are necessary to prepare the company for the next decade or two, Panasonic chief executive Yuki Kusumi said during an earnings call.
“I am truly sorry,” he said. “(But) if we don’t make drastic cuts to our fixed cost structure, we won’t be able to chase growth again.”
The 107-year-old Osaka-based company will pivot to areas such as energy-efficient power generation and storage and data centre power sources, while building on its EV battery and home appliance arms, according to an earnings presentation on Friday.
For the current business year, Panasonic forecast net income of ¥310 billion, after factoring in the restructuring costs. Analysts on average had estimated around ¥357 billion. The company said it hasn’t factored in the impact of additional United States tariffs.
Panasonic, which has been ramping up battery production in the U.S., reported a bigger-than-expected 74 per cent rise in net income for the March quarter. But sales in its in-vehicle energy segment have been falling steadily, even as executives stressed business remains robust in the U.S.
The company is fielding strong demand from its major customers, Kusumi said. Tesla is by far Panasonic’s biggest EV battery client. In addition to the jointly operated Gigafactory in Nevada, Panasonic has been boosting production capacity in Kansas.
That’s as Tesla grapples with slumping sales and rising costs from President Donald Trump’s trade war. Consumers around the world are shying away from a brand that’s become a political symbol due to Elon Musk’s involvement in Washington.
Shares of Panasonic are up only five per cent since the start of the year, hurt by fears about slowing EV sales and the impact from U.S. tariffs.
Panasonic oversees a vast array of businesses from hair dryers to elevators to industrial robots. In February it said it plans to streamline its operations, trim non-growth areas such as industrial devices and TVs and speed up a pivot through the use of artificial intelligence.
Panasonic has improved profitability in its TV operations through partnerships, but that it wasn’t enough, Kusumi said. “We are looking into many possibilities including furthering our partnerships,” he said.
—With assistance from Jake Rudnitsky.
Bloomberg.com
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