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Panasonic, Toshiba Profitable; Demand Remains Weak

One year ago, Japanese companies were reporting their first full quarter of business following the March 2011 earthquake and tsunami. This week, two of the nation’s largest electronics companies reported strong profits for the June quarter despite declining revenue.

{complink 4185|Panasonic Corp.} bounced back from a record loss of 772.2 billion yen in the comparable year-ago period to a net profit of 12.8 billion yen ($163 million) for the quarter ending in June. {complink 5648|Toshiba Corp.} more than doubled its quarterly profit to 11.47 billion yen ($147 million) in the April-June quarter, up from 4.12 billion yen a year ago.

Both companies saw single-digit declines in revenue: Panasonic’s sales dropped by 6 percent to 1.815 trillion yen and Toshiba’s net sales declined by 4.3 percent to 1,268.9 billion yen. Both companies reported aggressive cost-cutting measures during the quarter: Panasonic slashed its global workforce by more than 30,000 jobs and Toshiba scaled back its TV business and cut its NAND memory production.

Makoto Kubo, Toshiba corporate executive vice president, said, “This quarter (April-June) we saw a particularly large decline in prices for semiconductors, NAND flash memory chips,” at a news briefing reported by Reuters:

    'In overall electronic devices division sales, hard disk drives and storage sales remained positive, while the strong yen and the declining prices of memory chips cut into its sales,' he said.

    Toshiba's flagship NAND memory chips, the biggest single swing factor in the company's results, are used in Apple Inc.’s popular iPhones as well as fast-selling tablet devices.

    Toshiba said its electronic devices division, home to the NAND chips, posted first-quarter sales of 307.7 billion yen, down nearly 8 percent on the same period last year.

Both companies echoed concerns expressed by other electronic companies, including distributor {complink 453|Arrow Electronics Inc.}, that the industry faces “no to slow” growth in the upcoming quarter. Arrow executives reported orders were being delayed, rather than cancelled. “It’s being pushed out,” said CEO Mike Long, “but it’s not gone.” Arrow’s second-quarter sales of $5.15 billion declined 7 percent from sales of $5.54 billion in the prior year.

4 comments on “Panasonic, Toshiba Profitable; Demand Remains Weak

  1. FLYINGSCOT
    August 1, 2012

    Great that these two Japanese behemoths can post good profits on declining sales.  Downside is there are many more people now unemployed.  I hope the jobs market can absorb the influx.

  2. t.alex
    August 1, 2012

    Is it correct Panasonic is profitable thanks to their recent job cuttings ?

  3. Barbara Jorgensen
    August 1, 2012

    talex: yes, unfortunately that was a factor…

  4. t.alex
    August 2, 2012

    Well let's see the next quarter. Most japanese companies did have some layoffs plan or early retirement plan so far. I have heard about renesas electronics which is worse than the 2 above.

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