Panasonic Corporation

Company Profile
Publication Date: 17 Dec 2010

www.datamonitor.com
Europe, Middle East & Africa 119 Farringdon Road London EC1R 3DA United Kingdom t: +44 20 7551 9000 f: +44 20 7551 9090 e: euroinfo@datamonitor.com Americas 245 5th Avenue 4th Floor New York, NY 10016 USA t: +1 212 686 7400 f: +1 212 686 2626 e: usinfo@datamonitor.com Asia Pacific Level 46 2 Park Street Sydney, NSW 2000 Australia t: +61 2 8705 6900 f: +61 2 8088 7405 e: apinfo@datamonitor.com

Panasonic Corporation

ABOUT DATAMONITOR
Datamonitor is a leading business information company specializing in industry analysis. Through its proprietary databases and wealth of expertise, Datamonitor provides clients with unbiased expert analysis and in depth forecasts for six industry sectors: Healthcare, Technology, Automotive, Energy, Consumer Markets, and Financial Services. The company also advises clients on the impact that new technology and eCommerce will have on their businesses. Datamonitor maintains its headquarters in London, and regional offices in New York, Frankfurt, and Hong Kong. The company serves the world's largest 5000 companies. Datamonitor's premium reports are based on primary research with industry panels and consumers. We gather information on market segmentation, market growth and pricing, competitors and products. Our experts then interpret this data to produce detailed forecasts and actionable recommendations, helping you create new business opportunities and ideas. Our series of company, industry and country profiles complements our premium products, providing top-level information on 10,000 companies, 2,500 industries and 50 countries. While they do not contain the highly detailed breakdowns found in premium reports, profiles give you the most important qualitative and quantitative summary information you need - including predictions and forecasts.

All Rights Reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, Datamonitor plc. The facts of this profile are believed to be correct at the time of publication but cannot be guaranteed. Please note that the findings, conclusions and recommendations that Datamonitor delivers will be based on information gathered in good faith from both primary and secondary sources, whose accuracy we are not always in a position to guarantee. As such Datamonitor can accept no liability whatever for actions taken based on any information that may subsequently prove to be incorrect.

Panasonic Corporation Datamonitor

Page 2

Panasonic Corporation
TABLE OF CONTENTS

TABLE OF CONTENTS
Company Overview..............................................................................................4 Key Facts...............................................................................................................4 SWOT Analysis.....................................................................................................5

Panasonic Corporation Datamonitor

Page 3

Panasonic Corporation
Company Overview

COMPANY OVERVIEW
Panasonic Corporation (Panasonic or the company) manufactures and markets audio and video equipment, information and communications equipment; home appliances and components and devices.The company primarily operates in Japan. It is headquartered in Osaka, Japan and employs about 292,250 people. The company recorded revenues of JPY7,765,507 million (approximately $77,655.1 million) during the financial year ended March 2009 (FY2009), a decrease of 14.4% as compared to FY2008. The operating profit of the company was JPY72,873 million (approximately $728.7 million) during FY2009, a decrease of 86% as compared to FY2008. The net loss was JPY378,961 million (approximately $3,789.6 million) in FY2009, as compared to a net profit of JPY281,877 million (approximately $2,818.7 million) in FY2008.

KEY FACTS
Head Office Panasonic Corporation 1006 Oaza Kadoma Kadoma-shi Osaka 571 8501 JPN 81 6 6908 1121

Phone Fax Web Address

http://www.panasonic.net

Revenue / turnover 7,765,507.0 (JPY Mn) Financial Year End Employees New York Ticker Tokyo Ticker March 292,250 PC 6752

Panasonic Corporation Datamonitor

Page 4

Panasonic Corporation
SWOT Analysis

SWOT ANALYSIS
Panasonic Corporation (Panasonic or the company) manufactures and markets audio and video equipment, information and communications equipment; home appliances and components and devices. The company is well diversified both geographically as well as in terms of the product categories it offers. The diversified operations enable it to take advantage of a range of market opportunities across different markets. However, the intense competition and economic slowdown across the important geographies of the company could affect its business performance. Strengths Diversified business operations Strong brand name Constant focus on research and development Opportunities Growing global consumer and industrial electronics market Growing Indian household appliances market Weaknesses Weak financial performance Employee productivity Unfunded employee post retirement benefits

Threats Intense competition Economic slowdown Government regulations

Strengths

Diversified business operations Panasonic is well diversified both geographically as well as in terms of the product categories it offers.The company provides its products through five business divisions which include AVC Networks (accounted for 47.7% of the revenues in FY2009) home appliances (13%), Panasonic Electric Works (PEW) and PanaHome (22.1%), components and devices (10%), and other (7.2%). Further, the company has its operations in the Japan; North and South America; Europe; and Asia and others. Moreover, the company has balanced revenue mix in terms of revenue generated from various geographical locations. In FY2009, the company generated 52.6%, 12.8%, 12.4%, and 22.2% of the total revenue respectively from all these geographic regions. The diversified operations enable Panasonic to take advantage of a range of market opportunities while avoiding overexposure to any one market. Strong brand name

Panasonic Corporation Datamonitor

Page 5

Panasonic Corporation
SWOT Analysis

Panasonic has strong brand value in the electronic goods market. The company is one of the largest electronic product manufacturers in the world. The company provides a range of products, from audiovisual and information communication equipment to home appliances and components. It comprises of over 622 companies. It manufactures and markets over 15,000 products under brand names such as Panasonic, National, Technics, and Quasar. The company's brand Panasonic is among the 'best global brands' according to Interbrand report with a brand value of $4,281 million in 2008. The company is also taking a number of initiatives to improve its brand value. For instance in October 2008, the company announced to unify all its brands under Panasonic brand name by the end of FY2010. The strong brand name of the company increases the company's customer base and increases the company's market position in the consumer electronics market. Constant focus on research and development Panasonic has been regularly strengthening its research and developments (R&D) function. The company devotes significant resources and attention to develop consumer-preferred products with innovative and distinctive features. The R&D expenditure of the company amounted to JPY518 billion (approximately $5.2 billion), JPY555 billion (approximately $5.6 billion) and JPY578 billion (approximately $5.8 billion) for the three financial years ended March 31, 2009, 2008 and 2007, respectively, representing 6.7%, 6.1% and 6.3% of Panasonics total net sales for each of those periods. Further, these R&D activities helped the company to launch various new products in the recent past. For instance in FY2009, the company succeeded in nearly doubling the luminous efficiency*2 of its plasma TVs, which feature the worlds highest moving picture resolution of 1,080 lines while consuming approximately half the power. In the same year, the company also introduced rechargeable EVOLTA Battery that can be recharged and used approximately 1,200 times, an approximate 20% improvement. The companys another important development includes UniPhier System LSI for Mobile Phones that integrates communication and application functions tapping system to integrate approximately 280 million transistors on a single chip. Therefore, the continuous focus on R&D helps the company to innovate and introduce new products in line with changing consumer preferences.

Weaknesses

Weak financial performance Panasonic recorded weak financial performance in the previous financial year (FY2009). The companys revenues declined at a rate of 14.4% from JPY9,068,928 million (approximately $90,689.28 million) in FY2008 to JPY7,765,507 million (approximately $77,655.1 million) in FY2009. The profitability of the company also declined significantly during the FY2009. The operating profit of the company declined at a rate of 86% from JPY519,481 million (approximately $5,194.8 million) in FY2008 to JPY72,873 million (approximately $728.7 million) FY2009. Further, the company recorded

Panasonic Corporation Datamonitor

Page 6

Panasonic Corporation
SWOT Analysis

a net loss of JPY378,961 (approximately $3,789.6 million) in FY2009 as compared to a net profit of JPY281,877 million (approximately $2,818.7 million) in FY2008. The profit margins of the company have also declined significantly in the previous year. The operating profit margin of the company declined from 5.7% in FY2008 to 0.9% in FY2009. The net profit margin of the company also declined from 3.1% in FY2008 to a negative rate of 4.8% in FY2009. The significant decline in the companys financial performance would hamper its growth plans, which could affect its business operations and the market position. Employee productivity The company's employee efficiency, measured by total revenues per employee, is low as compared to Samsung and LG Electronics. For the financial year ended on March 31, 2009, the revenue per employee of the company stood at JPY26.5 million (approximately $265,714) with total revenues of JPY7,765,507 million ($77,655.1 million), and 292,250 employees. While, the revenue per employee of Samsung stood at $752,024 for the financial year ended December 2008, significantly higher than the revenue per employee of Panasonic. Similarly, the revenue per employee of LG Electronics stood at $697,495 for the financial year ended December 2008. Low revenues per employee indicate relatively lower employee productivity of the company. Unfunded employee post retirement benefits The company provides pension benefits and other post-retirement health and life insurance benefits to employees. During the FY2009, the company incurred a total of JPY77,682 million (approximately $776.8 million) for the pension and post retirement benefit expenses. The company also paid a total of JPY79,511 million (approximately $795.1 million) for the pension and post retirement benefit plans during FY2008. Further, at the end of March 2009, the company's projected pension and post-retirement benefit obligations stood at JPY1,821,937 million (approximately $18,219.3 million) as compared to the planned assets of JPY1,413,646 million (approximately $14,136.5 million), resulting into an unfunded status of JPY408,291 (approximately $4,082.9 million). Sizeable unfunded post retirement benefits would force the company to make periodic cash contributions towards bridging the gap between post retirement benefits obligations and planned assets, which would reduce cash available for growth plans.

Opportunities

Growing global consumer and industrial electronics market The global consumer and industrial electronics market is witnessing strong growth. The global consumer and industrial electronics reached $92,000 million in 2008. Further, the market is expected to grow at a rate of 7.2% annually to reach a value of $136,700 million in 2014. The company is one

Panasonic Corporation Datamonitor

Page 7

Panasonic Corporation
SWOT Analysis

of the largest consumer and industrial electronic product manufacturers in the world. It provides a range of products, from audiovisual and information communication equipment to home appliances and components. The company is thus well positioned to benefit from the growing electronics market. Growing Indian household appliances market The performance of the household appliance market in India has been impressive in the recent years. Indian consumers increased their spending on household appliances. As shown on Datamonitor's report on Household Appliances in India, June 2009, the Indian household appliances market generated total revenues of $4,800 million in 2008, representing a compound annual growth rate (CAGR) of 12.5% for the period spanning 200408.The performance of the market is forecast to accelerate further, with an anticipated CAGR of 10% for the five-year period 200813, which is expected to drive the market to a value of $7,700 million by the end of 2013. Panasonic implemented various initiatives in India like opening 18 brand shops, starting local LCD TV production, re-entering the air conditioner, refrigerator, and washing machine markets. Therefore through its initiatives, Panasonic is well positioned to tap the growing Indian market, which could translate into strong revenue growth for the company.

Threats

Intense competition The company operates in a highly competitive environment. It faces intense competition from a number of players, many of whom have strong consumer brand equity. Several of these competitors, such as LG and Samsung, are large, well-established companies that rank among the Global Fortune 150. Competition in the global market is based on a number of factors including performance, innovation, product features, quality, cost, selling price, distribution, and financial incentives, such as cooperative advertising, marketing funds, volume rebates, and terms. The entry of sizable new players would further intensify the competition in the electronics market and drive prices down. This would put pressure on the company's profitability and would affect its market share. Economic slowdown The company generates its revenues primarily from Japan, and Europe. For the FY2009, the company derived 66% of its revenues from Japan and Europe. According to IMF's (International monetary fund) World Economic Outlook July 2009 report, the real GDP growth of Japan is expected to slowdown in 2009. The GDP of Japan is expected to decline at a rate of 6% in 2009, as compared to a decline at a rate of 0.7% in 2008. Similarly, the GDP of Europe is expected to decline at a rate of 4.8% in 2009 as compared to a growth rate of 0.8% in 2008. The economic downturn has led to a severe decline in consumer confidence. Consumers also have less money for discretionary purchases as a result of job losses, foreclosures, bankruptcies and reduced access to credit.Therefore a weak economic outlook for important regions would put pressure on the revenues of Panasonic.

Panasonic Corporation Datamonitor

Page 8

Panasonic Corporation
SWOT Analysis

Government regulations Panasonic is subject to a number of stringent laws and regulations related to the protection of environment and human health and safety. The company will continue to incur capital and other expenditures to comply with these regulations. The compliance with the recently passed and enacted regulations in Europe, such as the WEEE (Waste Electrical and Electronic Equipment) and ROHS (Restriction of Hazardous Substances) directives, may increase company's costs and adversely affect its ability to sell certain products in Europe. These types of costs could negatively affect the company's financial performance. Additionally, the company could be subjected to future liabilities, fines or penalties or the suspension of product production for failing to comply with environmental regulations.

Panasonic Corporation Datamonitor

Page 9

Copyright of Matsushita Electric Industrial Co., Ltd. SWOT Analysis is the property of Datamonitor Plc and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use.