Although all the major Japanese consumer and electronics giants – Sharp, Sony, Panasonic and Toshiba -- have been facing the headwinds of soft consumer demand and competitive pricing pressures, some are doing better than others. Sony and Toshiba have returned profitability in calendar 2013, but Sharp and Panasonic continue to adjust. Panasonic Corp. especially is lagging behind its peers in its struggle to return to profitability.
All four companies cite lagging display and TV sales as a big part of the problem. Last Friday, Panasonic reported a loss of 754.3 billion yen ($7.42 billion) for fiscal 2013, ended in March. Sales for fiscal 2013 declined 7 percent from the previous year to 7.3 trillion yen ($71.9 billion). According to media reports, the company partly blamed the severe conditions of the consumer electronics industry, particularly sluggish demand for flat-panel TVs in Japan.
Liquid crystal display (LCD), the dominant technology is the display and TV markets, has reached maturity and growth has stagnated, according to Sweta Dash, Senior Director, Display Research and Strategy, IHS. New vendors — many of them from China—have entered the LCD market and driven prices down. As a result, display manufacturers are focusing on larger-sized screens (50 inches and above) to increase both their average selling prices (ASP) and profitability.
Sharp Corp. expects to post a bigger-than-forecast net loss for the year ended in March in part because low output at its factories forced it to write off excess capacity, according to news reports. Japan's leading maker of liquid crystal displays may have a 500 billion yen ($5.1 billion) net loss for the year, worse than the 450 billion yen deficit it forecast in November, according to Reuters.
Sony Corp. last week reported a profit of $458 million (43 billion yen); the first time the company has been in the black at the end of its fiscal year since 2008. And Toshiba Corp forecast a 34 percent jump in operating profit to reach 260 billion yen ($2.6 billion) for the year-ending March 31, boosted by strong sales of its flash memory chips. However, the outlook fell short of market expectations as it struggles to turn around its TV division.
Sony and Toshiba, along with Japan’s Hitachi Ltd., have spun off portions of their LCD businesses into the standalone venture Japan Display Inc., subsidized by the Japanese government. Sharp has sought investment to offset LCD pricing pressure, including one from Foxconn’s parent Hon Hai and another from U.S. chipmaker Qualcomm.
Panasonic had put in place a restructuring plan that has so far fallen short of expectations, according to analysts.