Panasonic reports record $10 billion annual loss

Japan s Panasonic Corp forecast a record annual net loss of $10.2 billion on Friday, joining beleaguered rivals Sony and Sharp in a sea of red ink as they struggle to fix their broken TV businesses and overcome criticism that they have lost their way.

 

Panasonic said it was headed for a loss of 780 billion yen ($10.24 billion) for the year to March, dwarfing expectations for a loss of around $6.2 billion. The loss was almost entirely due to big restructuring charges and writedowns, including to its Sanyo Electric unit.

 

Its grim outlook follows loss forecasts at Sony and Sharp Corp – almost $17 billion combined for the three Japanese electronics firms – highlighting the impact of fierce competition from foreign rivals such as South Korea s Samsung Electronics, weak demand and a strong yen.

 

Panasonic, which is in the process of shedding 17,000 jobs by end-March, also missed third-quarter market forecasts, diving to a loss of 197.6 billion yen from a profit a year earlier.

 

With TVs becoming smart – linked to other devices like tablets and smartphones – an inability to win in the TV market risks hobbling sales across their consumer electronics line-up.

 

“They don t seem like a company that s progressing towards a particular goal,” said Yuuki Sakurai, CEO and president of Fukoku Capital, which managed assets worth $7.6 billion as of last March. “What exactly is this company good at? What does it want to do? They don t have answers to these questions.”

 

Makoto Kikuchi, CEO of Myojo Asset Management in Tokyo, noted Panasonic, Sharp and Sony all have structural issues, and need to come to grips with problems in their TV businesses.

 

Speaking to reporters on Friday, Panasonic President Fumio Ohtsubo gave no indication he planned to ditch the TV business.

 

“I don t think it s a business that has lost its growth potential,” he said, adding Panasonic wanted to “develop TV in a different manner” by exploring growth in sales to businesses rather than direct to consumers.

 

The near-term outlook for better TV sales is grim.

 

By 2015, flat panel industry research company DisplaySearch expects annual global sales of liquid crystal TVs to contract by 8 percent to $92 billion. Even worse, plasma sets, a market that Panasonic dominates, will shrink 38 percent to $7 billion.

 

If Panasonic s market share “keeps shrinking by 10 percent or so they may need to prepare some more restructuring,” said Shiro Mikoshiba, analyst at Nomura Holdings in Tokyo.

 

Moody s Investors Service downgraded the debt ratings of Panasonic and Sony last month and retained a negative outlook for both, citing their continued losses on TVs.

 

It s not only the TV unit, however, that poses a risk to profits and is keeping investors away from Panasonic shares, say analysts.

 

Panasonic shares initially fell on Friday, extending a slide to their lowest in more than 30 years, but later rallied to close 1.2 percent higher ahead of the quarterly results.

 

“One silver lining is that there is investment being made for the future,” said Hiroyuki Fukunaga, CEO of Investrust.

 

“You could take the added restructuring costs as a serious move by the company to reform and improve its business. You could look at this as the bottom, to show all the losses and then move aggressively towards the next quarter,” he said.

 

Sony on Thursday pressed its reset button by announcing that Kazuo Hirai will succeed Howard Stringer as CEO in April, sparking an 8 percent surge in its share price on Friday, its biggest one-day percentage gain in almost a year.

 

Ohtsubo, who like Stringer at Sony, has called the shots at Panasonic for the past six years, has so far shown no intent to step aside.

 

“Its last record net loss in 2001/02 was because of the impact of a sudden slump in PCs after the IT bubble burst, but there was hope then for growth in flat-screen TVs,” said Hideyuki Suzuki, general manager investment research at SBI Securities.

 

“This time, and not just for Panasonic, it doesn t feel like they ve got rid of all the rot.”

 

SANYO DRAG

 

Buying Sanyo was part of a strategy to focus Panasonic more on business-to-business markets such as car parts and green technologies, rather than selling to more fickle retail consumers.

 

Panasonic makes everything from refrigerators and bicycle pumps to fax machines, light bulbs and nose hair trimmers. Its most profitable business currently is white goods, including fridges and washing machines.

 

“We decided to purchase (Sanyo) in the summer of 2008 and … the competition (environment) has changed since then and the yen has strengthened very much,” said Panasonic Managing Director Makoto Uenoyama.

 

Sanyo had a quarterly operating loss of more than 20 billion yen.

 

Panasonic, which trimmed its forecast for the number of flat-screen TVs it will sell, does expect to make an operating profit for the year, though this is now seen at just 30 billion yen, down from a previous 130 billion yen.

 

Last year, Panasonic had an operating profit, which excludes one off items, of 305 billion yen.
 

Euro under pressure amid Greek talks

 

The euro remained under pressure in Asia on Friday as market players awaited developments in Greece s talks on a debt writedown.

 

The single currency fetched $1.3103 in Tokyo afternoon trade, flat from New York late Thursday, while easing to 100.81 yen from 101.48.

 

The dollar fell to 76.92 yen from 77.40 yen as short-term speculators triggered stop-loss selling orders around 77.25 yen, a dealer at a major Japanese investment bank said.

 

The dollar trended lower after the Federal Reserve s pledge to maintain low interest rates for a prolonged period, the dealer told Dow Jones Newswires.

 

Broader market attention was shifting back to the ongoing Greek debt talks, said Sumino Kamei, senior analyst at Bank of Tokyo-Mitsubishi UFJ.

 

The focus will be on a European Union summit meeting in Brussels on Monday and whether or not any progress will be made by then, she said.

 

“With uncertainty over the future of the European sovereign debt crisis, the euro will continue to fall,” she said.

 

Greece resumed talks Thursday with banks and insurers on a deal for a major debt writedown to escape looming default.

 

Prime Minister Lucas Papademos and Finance Minister Evangelos Venizelos met the private creditors  lead negotiators, Charles Dallara and Jean Lemierre, with the talks due to resume again on Friday.

 

The private creditors said in a statement that “some progress was realised” in Thursday s discussions.

 

The dollar mostly firmed against other Asian currencies.

 

It edged up to 31.29 Thai baht from 31.23 baht Thursday, to Sg$1.2573 from Sg$1.2562, to 42.84 Philippine pesos from 42.81 pesos, to 1,123.30 South Korean won from 1,121.00 won, and to 8,965.00 Indonesian rupiah from 8,960.00 rupiah.

 

The dollar held steady at Tw$29.89.

Japan to pump radioactive water into sea until Sunday

TOKYO: Japan will pump radioactive water into the sea from a crippled nuclear plant until Sunday, a day later than previously planned, its nuclear safety agency said.

Japan orders immediate safety steps for nuclear plants

TOKYO: Japan’s trade ministry ordered nuclear power plant operators to immediately start implementing new safety measures on Wednesday in light of the crisis at the Fukushima plant, which it said was due to a higher tsunami than expected after the March 11 earthquake.

 

Japan nuclear crisis far from over, UN agency warns

TOKYO: Japanese engineers struggled on Sunday to pump radioactive water from a crippled nuclear power station while the United Nations’ chief nuclear inspector said the crisis triggered by this month’s earthquake and tsunami was far from over.

Recent major earthquakes to hit Japan

Japan was struck on Friday by an earthquake with a magnitude of 8.9, the biggest in about 140 years.

Japan is one of the world’s most earthquake-prone countries, with a tremor occurring at least every five minutes.

Located in the “Ring of Fire” arc of volcanoes and oceanic trenches partly encircling the Pacific Basin, the country accounts for about 20 percent of the world”s earthquakes of magnitude 6.0 or greater.

Tokyo, with a population of 12 million, sits on the junction of four tectonic plates: the Eurasian, North American, Philippine and Pacific.

The sudden bending or breaking of any plate can trigger an earthquake.

Following are dates of some major recent quakes.

Aug. 16, 2005 – A major quake with a magnitude of 7.2 rocked a region about 300 km (190 miles) north of Tokyo, injuring more than 80 people.

Oct. 23, 2004 – A 6.8 magnitude quake hit the Niigata region, about 250 km (150 miles) north of Tokyo, killing 65 people and injuring 3,000.

Jan. 17, 1995 – A quake of 7.3 magnitude struck, killing more than 6,400 in the western city of Kobe in 1995. It caused $100 billion in damage and was the costliest natural disaster in history.

The Great Kanto earthquake on Sept. 1, 1923, had a magnitude of 7.9. It killed more than 140,000 people in the Tokyo area and seismologists have said another such quake could hit the city any time.

What is a tsunami?

TOKYO: A once-exotic word that has now entered the everyday lexicon, a tsunami refers to a shock of water that spreads through the sea, usually after a sub-sea floor quake.

A section of seabed is thrust up or driven down by violent movement of the Earth”s crust.

The rift displaces vast quantities of water that move as waves, able to cover enormous distances over open water, sometimes at the speed of a jet plane.

An 8.9-magnitude quake off Japan”s northern coast on Friday generated a 10-metre (33 feet) tsunami that picked up ships and dashed them into coastal towns.

Buildings and vehicles were carried away as the huge wall of water swept inland.

The word “tsunami” comes from the Japanese words for “harbour” and “wave”.

At their point of generation, tsunamis have a relatively small wave height, with peaks far apart.

As the waves approach the shore they are compressed by the shelving of the sea floor, reducing the distance between the peaks and vastly increasing the height.

To those on the shore, the first sign of something amiss can be the retreat of the sea, which is followed by the arrival of large waves.

“The sea was driven back, and its waters flowed away to such an extent that the deep seabed was laid bare and many kinds of sea creatures could be seen,” wrote Roman historian Ammianus Marcellus, awed at a tsunami that struck the then-thriving port of Alexandria in 365 AD.

“Huge masses of water flowed back when least expected, and now overwhelmed and killed many thousands of people… Some great ships were hurled by the fury of the waves onto the rooftops, and others were thrown up to two miles (three kilometres) from the shore.”

Several factors determine the height and destructiveness of a tsunami.

They include the size of the quake, the volume of displaced water, the topography of the sea floor as the waves race to the coast and whether there are natural obstacles that dampen the shock.

Destruction of protective mangroves and coral reefs and the building of homes or hotels on exposed beaches are fingered as leading causes of high death tolls from tsunamis.

Large quakes are the main drivers of tsunamis, but the phenomenon can also be sparked by other cataclysmic events, such as volcanic eruptions and even landslides.

In 1883, a volcano shattered the Pacific island of Krakatoa, causing a blast so loud that it could be heard 4,500 kilometres away, followed by a tsunami that killed some 30,000 people.

The tsunami of December 2004 in the Indian Ocean was caused by a monstrous 9.1-magnitude earthquake off the Indonesian island of Sumatra.

It released energy equivalent to 23,000 of the atomic bombs dropped on Hiroshima, according to the US trendpk.comlogical Survey (USGS). Some 220,000 people in 11 nations were killed, many of them thousands of kilometres from the epicentre.

The Pacific Ocean is particularly prone to earthquakes and therefore to tsunamis.

But research has found that, over the millennia, tsunamis have occurred in many parts of the world, including the Atlantic and Mediterranean. A global monitoring network, overseen by the UN, has been set in place to alert areas at risk.

Huge tsunami slams coastal Japan after 8.9 quake

TOKYO: A massive 8.9 magnitude quake hit northeast Japan on Friday, triggering a 10-metre tsunami that swept away everything in its path, including houses, cars, farm buildings on fire and boats, media and witnesses said.

At least one person was killed in Fukushima prefecture, north of Tokyo where four million homes were without power. The quake caused many injuries, fires and a wall of water across the coast, prompting warnings to people to move to higher ground.

There were several strong aftershocks. In the capital Tokyo, buildings shook violently.

TV pictures showed a vast wall of water carrying the debris and even fires across a large swathe of coastal farmland near the city of Sendai, which has a population of one million.

Public broadcaster NHK showed flames and black smoke billowing from a building in Odaiba, a Tokyo suburb, and bullet trains to the north of the country were halted.

Black smoke was also pouring out of an industrial area in Yokohama’s Isogo area. TV footage showed boats, cars and trucks floating in water after a small tsunami hit the town of Kamaichi in northern Japan. An overpass, location unknown, appeared to have collapsed into the water.

Kyodo news agency said there were reports of fires in Sendai where waves carried cars across the runway at the airport.

The western prefecture of Wakayama ordered 20,000 people to evacuate after further tsunami warnings.

“WORST IN 20 YEARS”

“The building shook for what seemed a long time and many people in the newsroom grabbed their helmets and some got under their desks,” Reuters correspondent Linda Sieg said in Tokyo.

“It was probably the worst I have felt since I came to Japan more than 20 years ago.”

The Tokyo stock market extended losses after the quake. The central bank said it would do everything to ensure financial stability.

Passengers on a subway line in Tokyo screamed and grabbed other passengers” hands. The shaking was so bad it was hard to stand, said Reuters reporter Mariko Katsumura.

Hundreds of office workers and shoppers spilled into Hitotsugi street, a shopping street in Akasaka in downtown Tokyo.

Household goods ranging from toilet paper to clingfilm were flung into the street from outdoor shelves in front of a drugstore.

Crowds gathered in front of televisions in a shop next to the drugstore for details. After the shaking from the first quake subsided, crowds were watching and pointing to construction cranes on an office building up the street with voices saying, “They”re still shaking!”, “Are they going to fall?”
Asagi Machida, 27, a web designer in Tokyo, sprinted from a coffee shop when the quake hit.

“The images from the New Zealand earthquake are still fresh in my mind so I was really scared. I couldn”t believe such a big earthquake was happening in Tokyo.”

The US trendpk.comlogical Survey earlier verified a magnitude of 7.9 at a depth of 15.1 miles and located the quake 81 miles east of Sendai, on the main island of Honshu. It later upgraded it to 8.9.

A police car drove down Hitotsugi Street, lights flashing, announcing through a bullhorn that there was still a danger of shaking.

Japan”s northeast Pacific coast, called Sanriku, has suffered from quakes and tsunamis in the past and a 7.2 quake struck on Wednesday. In 1933, a magnitude 8.1 quake in the area killed more than 3,000 people. Last year fishing facilities were damaged after by a tsunami caused by a strong tremor in Chile.

Earthquakes are common in Japan, one of the world’s most seismically active areas. The country accounts for about 20 percent of the world”s earthquakes of magnitude 6 or greater.

Asian shares rise as oil prices fall

HONG KONG: Asian stocks rose on Friday as oil prices slipped from recent highs after OPEC said it would boost crude output if the Middle East crisis hit supplies, with traders eagerly snapping up bargains.

The euro extended its rally against the dollar as expectations grow that the European Central Bank will hike interest rates soon as it tries to take the heat out of rising eurozone inflation.

Tokyo gained 0.71 percent, or 74.05 points, to end at 10,526.76 and Sydney ended 0.57 percent, or 27.2 points, higher at 4,836.5, while Seoul closed 0.69 percent, or 13.54 points, up at 1,963.42.

Hong Kong jumped 1.82 percent, or 411.33 points, to 23,012.37 after four straight days of losses.

Shanghai closed flat at 2,878.57 as strong bank results and easing fears over monetary tightening were offset by weaker gold miners and oil firms.

The oil price rally sparked by turmoil in the Middle East was halted, at least temporarily, after the Organisation of the Petroleum Exporting Countries (OPEC) said it would increase production to make up for any losses caused by unrest in oil exporter Libya.

Saudi Oil Minister Ali al-Naimi said his country would increase output, according to commodities specialist Platts.

Jitters returned later in the day but oil prices were still well down from this week’s earlier highs.

Brent North Sea crude for April delivery was up $1.26 at $112.62 per barrel after almost hitting $120 late Thursday.

New York’s main contract, light sweet crude for April, rose 36 cents to $97.64 after earlier heading north of $100.

Global stock markets have fallen over the past week as uprisings across the oil-rich Middle East and North Africa sparked fears of surging oil prices.

This in turn fuelled inflationary worries as many countries struggle to keep a lid on prices in the wake of the global financial crisis.

“With food prices already at very high levels, the last thing the global economy needs now is soaring energy prices,” said Khoon Goh, a senior economist at ANZ Bank in Wellington.

“Such a combination will surely present a real inflation challenge for central banks around the world,” he told Dow Jones Newswires.

The troubles in Libya, where Moamer Kadhafi was clinging to his four-decade rule, kept a cap on gains, however, as the death toll from the unrest climbs higher and thousands try to flee the country.

The euro climbed against the greenback after German central bank chief Axel Weber said Thursday that interest rates “can only go one way from here”.

“Rates only know one direction at the moment — and that is north,” he said.

The single European currency changed hands at $1.3817 in Tokyo afternoon trading, compared to 1.3797 in New York late Thursday. It rose to 113.29 yen from 112.94 yen.

Sumino Kamei, senior analyst at the Bank of Tokyo-Mitsubishi UFJ, said: “The hawkish comment from Weber gave an additional fuel to speculation about the ECB’s rate hike.”

The dollar fetched 81.96 yen, little changed from 81.91 yen.

On the Tokyo exchange, car giant Toyota rose 2.18 percent to 3,755 yen despite news that it is recalling more than two million vehicles to fix floor mat and carpet defects that could jam the accelerator.

The improved sentiment saw the price of safe-haven gold lower than recent highs and it closed at $1,408.00-$1,409.00 an ounce, down from Thursday’s close of $1,414.00-$1,415.00.

In other markets:

– Singapore closed up 1.75 percent, or 52.08 points, at 3,025.16.

Oversea-Chinese Banking Corp rose 0.87 percent to Sg$9.26 and Singapore Airlines gained 1.46 percent to Sg$13.86.

– Taipei rose 0.68 percent, or 58.01 points, to 8,599.65.

Chunghwa Telecom was up 0.23 percent at Tw$88.1.

– Manila gained 0.17 percent, or 6.20 points, to 3,737.04.

Aboitiz Equity rose 2.3 percent to 40.00 pesos and Philippine Long Distance Telephone gained 1.1 percent to 2,222, but Metropolitan Bank was off 0.5 percent at 56.95.

– Jakarta rose 0.13 percent, or 4.40 points, to 3,443.53.

Coal producer Bumi rose 5.4 percent to 2,925 rupiah, car maker Astra ended up 0.3 percent at 51,550 and Bank Central Asia fell 2.4 percent to 6,100.

– Kuala Lumpur closed flat at 1,489.27.

Petronas Chemicals climbed 1.4 percent to 6.30 ringgit as plantations giant Sime Darby rose 0.2 percent to 9.04 and construction firm KL Kepong slid 2.8 percent to 20.20.

– Wellington edged down 0.13 percent, or 4.44 points, to 3,363.91.

Auckland Airport fell 0.9 percent to NZ$2.24 and resins maker Nuplex edged down 2.4 percent to NZ$3.31, but Fletcher Building gained 0.6 percent to NZ$8.63.

– Bangkok edged up 0.89 percent or 8.69 points to 985.91.

Banpu added 4.00 baht to 740.00, while PTT gained 3.00 baht to 343.00.

– Mumbai’s benchmark 30-share Sensex index rose 68.5 points to 17,700.91 after the government said Friday the country’s economy could grow by over nine percent next year but warned inflation remained a concern

India’s second biggest mobile phone firm Reliance Communications fell 5.4 percent or five rupees to 87.55 on growing concerns over the ongoing probe into a suspected multi-billion-dollar telecom scandal.

Kernex Microsystems, which makes rail safety devices, fell 4.97 percent or 4.95 rupees to 94.6 while private rail wagon maker Titagarh Wagons, plunged 13.06 percent or 49.85 rupees to 331.8.

Asian shares mixed

A mixed trend was witnessed in Asian stocks on Tuesday.

Japanese shares ended mixed with the key Nikkei index losing 0.29 per cent on European debt concerns amid growing speculation about a possible bailout of Portugal, dealers said. The headline Nikkei index at the Tokyo Stock Exchange fell 30.36 points to 10,510.68 but the Topix index of all first section shares edged up 0.06 per cent, or 0.52 points, to 926.94.Chinese shares closed up 0.44 per cent as heavyweight banks and property stocks rebounded from the previous session?s sell-off, dealers said. The Shanghai Composite Index, which covers both A and B shares, was up 12.24 points at 2,804.05 on turnover of 94.5 billion yuan (S$18.4 billion).Hong Kong shares gained 0.99 per cent as bargain-buyers stepped in following two days of losses. The benchmark Hang Seng Index ended 233.08 points higher at 23,760.34 on turnover of HK$71.71 billion (S$12 billion).

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