As losses mount Panasonic could look to curb solar panel, lithium battery expansion

According to sources at Panasonic Corp the company may look to curtail plans to expand production of solar panels and small lithium batteries used in PCs and other devices. Speaking to Reuters the sources said that the proposals could form part of a new round of restructuring and come at a time when the company is expecting to report losses of 765bn yen (£5.9bn) in the current financial year due, in part, to falling sales and restructuring expenses.

Panasonic had earlier projected a 50bn-yen profit for the financial year but this has been affected by the company’s efforts to restructure its business. Costs relating to that were expected to be almost 11 times more than previously estimated. Sales have been hit by a strong yen and by slowing demand for TVs.

Panasonic also reported that it made a loss of 698bn yen in the July-to-September quarter.

Panasonic recently built a solar panel plant in Malaysia, a significant financial investment that upped capacity by one-third to 900 megawatts. Plans to further ramp up production to 1.5 gigawatts may now have to be scaled back, because of weak demand, particularly in Europe, according to the source.

Panasonic”s new president, Kazuhiro Tsuga, has promised to reverse the company’s fortunes and has said that he will weed out loss-making or low-profitability units.

The firm”s small lithium batteries business has struggled in the face of price competition from Korean and Chinese competitors and has sought to return to profit, after making a loss this year, by moving production to the Chinese mainland. Despite this the division is now expecting a further loss, according to the source.

As a result of the squeeze on expanded output of solar panels and batteries, Panasonic”s energy unit may struggle to reach a target of raising sales to more than 1 trillion yen, or 10 percent of overall sales, the source said.

The firm said that continued uncertainty in the global economy over the eurozone debt crisis and the slowdown in Asian economies, has been hurting demand generally for electronics goods. Sales in Japan fell 11% in the three months to the end of September, as compared with the same period last year, while overseas sales dropped by 14%.