Japan's Panasonic said its quarterly earnings more than tripled, extending its renaissance as a maker of high-tech parts for cars and energy-efficient homes with few qualms about selling off legacy businesses that once dragged it into losses.
The Osaka-based electronics firm said on Tuesday that operating profit surged to 116.6 billion yen (851m) in the October-December quarter. It also signalled it is nearing the end of its long-running restructuring, striking a deal to sell microchip assembly plants in Southeast Asia to a unit of Singapore's UTAC Holdings Ltd.
Panasonic is emerging from a period of heavy losses across Japan's consumer electronics industry, squeezed by competition from aggressive rivals like Samsung Electronics. After losing $15bn over the previous two years, Panasonic's reinvention of itself as a force in automaking and housebuilding, rather than TVs or smartphones, means it is forging ahead of peers like Sony Corp in the restructuring game.
"We see Panasonic emerging as a transformation champion ... beyond restructuring, Panasonic looks positioned to emerge as a strong corporate leader," Atul Goyal, an analyst at Jefferies in Singapore, wrote in a note issued to clients ahead of the earnings.
Panasonic's quarterly operating profit was more than three times the year earlier's 34.6 billion yen. It was close to double expectations of about 66.2 billion yen, the "SmartEstimate" or average of the most accurate analysts surveyed by Thomson Reuters I/B/E/S.
Quarterly net profit grew to 73.7 billion yen from 61.4 billion yen a year earlier.
Under President Kazuhiro Tsuga, Panasonic has been shifting away from consumer-oriented sectors and embracing business clients instead. While selling off businesses like its healthcare arm and semiconductor operations, it has been pushing through a costly restructuring in its TV operations - a move also under way at Sony, which reports earnings on Feb. 6.
Those efforts paid off in the October-December quarter. Panasonic narrowed losses in its TV panels division to 8.1 billion yen from 25.5 billion yen a year earlier. In its semiconductors business, losses shrank to 5.4 billion yen from 8.2 billion yen.
By contrast, its automotive and industrial systems division posted 28.2 billion yen in profit, while its "eco solutions" segment, mainly household fittings and appliances, earned 32.1 billion yen. Both serve sectors that have benefited from reflationary policies and a weaker yen under Prime Minister Shinzo Abe.
The company said it had seen particularly strong sales in its auto parts division, which signed a contract with U.S. carmaker Tesla to supply nearly 2 billion cells in the four years to 2017, a big jump from the 200 million cells it is supposed to have provided over the two years to last December.
Panasonic said it would push ahead quickly to complete its restructuring, for which it has budgeted 170 billion yen in the year to end-March.
"We will use the whole budget - we may even go over," Chief Financial Officer Hideaki Kawai said at a briefing in Tokyo. "We have a sense of urgency and we will bring it forward and do whatever we can this year."
Despite the strong quarter, Panasonic didn't take advantage of its momentum to raise its full-year earning guidance.
While operating profit for the first nine months of the year was already 263.2 billion yen, it didn't lift its fiscal year operating profit from the 270 billion yen it forecast last October.
That's down to Panasonic's traditionally cautious forecasting rather than any expectation of a tough January-March quarter. Before their forecasts were easily beaten for the third quarter, analysts were already expecting a 12-month operating profit of about 286.7 billion yen, according to the "SmartEstimate" or average of the most accurate analysts surveyed by Thomson Reuters I/B/E/S.