This presentation contains consolidated financial results ...

Copyright (C) 2014 Panasonic Corporation All Rights Reserved.

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• This presentation contains consolidated financial results for

fiscal 2014, ended March 31, 2014 and the current forecast for

fiscal 2015.


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• First, the financial results for fiscal 2014.


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• This slide shows three main points regarding fiscal 2014.

• Firstly, operating profit increased significantly from last year. This

was due mainly to the expansion of housing/automotive-related

businesses and improvements in unprofitable businesses such as

TV/Panel. In addition, undertaking company-wide fixed-cost

reductions and streamlining initiatives supported overall profit

increase.

• Secondly, additional and brought forward business restructuring

were carried out. Setting direction of major challenging businesses

has been completed such as reorganization of semiconductor

business and termination of PDPs.

• Finally, financial structure has improved significantly. The levels of

net cash and shareholders’ equity ratio have improved steadily. As a

result, the Company’s mid-term plan targets will be achieved more

speedily.


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• Consolidated group sales were up by 6% compared with the previous year. However, in real terms (excluding the effects of exchange rates) consolidated group sales decreased by 3%.

• Operating profit increased from last year. Pre-tax income and net income attributable to Panasonic Corporation moved into the black, showing major progress from last year when there were huge losses.

• Compared with the FY14 forecast, sales increased due mainly to a

demand surge prior to the consumption tax increase in Japan.

Operating profit also improved owing to sales increases. However,

pre-tax income was slightly lower than the forecast due to additional

and brought forward business restructuring. Net income attributable

to Panasonic Corporation exceeded the forecast mainly as a result of

improvement in the provision for income taxes.


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• This slide shows sales analysis by major product compared with last year.

• Sales in real terms (excluding the effect of exchange rates) increased

steadily in housing/automotive-related products such as

energy/housing systems and automotive infotainment. However,

weaker sales in digital consumer-related products such as TVs, and

business transfers impacted negatively on overall sales which declined

in real terms by 191.6 billion yen from last year.


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• Next, operating profit analysis compared with last year.

• Although profitability declined by 67.0 billion yen due to sales

decreases in real terms, it improved by 50.0 billion yen as a result of

corporate-wide measures, including bonus reductions, and by 98.2

billion yen due to other fixed-cost reductions.

• A 40.0 billion yen benefit from restructuring was included in the fixed-

cost reductions.

• A 43.0 billion yen improvement due to streamlining on materials

which exceeded price declines, and a 20.0 billion yen benefit from

yen depreciation also contributed to the overall operating profit

improvement of 144.2 billion yen.


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• Next, operating profit analysis by segment.

• Overall operating profit growth was led by significant improvements

in profitability in Automotive & Industrial Systems due to automotive-

related business growth, and in Eco Solutions due to capturing of

demand in the housing-related business prior to the consumption tax

increase in Japan.

• Profitability in AVC Networks improved considerably due mainly to

business restructuring reforms.

• Lower profitability in Appliances was caused mainly by a decline in

air-conditioner business.


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• Next, sales and operating profit results by segment.

• Operating profit in the Eliminations and adjustments improved by

33.9 billion yen from last year due mainly to the improved profitability

in consumer-related sales division.

• Business promotion through integration of production and sales

management is now bearing fruit, showing steady profit improvement.


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• Next, pre-tax and net income analysis.

• Non-operating loss was 98.9 billion yen. A 78.7 billion yen profit on

sales of Healthcare business and a one-off gain of 79.8 billion yen

from changes in Corporation pension scheme were recorded.

Meanwhile, business restructuring expenses of 207.4 billion yen

were recorded.

• As a result, pre-tax income was 206.2 billion yen and net income

attributable to Panasonic Corporation was 120.4 billion yen.

• Pre-tax income increased significantly compared with the previous

year when large-scale business restructuring expenses were booked.

Net income attributable to Panasonic Corporation also increased

considerably due not only to the aforementioned reason but also to

the valuation allowances to deferred tax assets which increased last

year.


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• The breakdown in the business restructuring expenses by segment

are shown here.

• In the AVC Networks, impairment losses for fixed assets relating to

flat- panel business were incurred.

• In impairment losses for fixed assets in the Automotive & Industrial

Systems, a 21.7 billion yen for circuit board-related and a 20.1 billion

yen for semiconductor-related were included.


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• Next, free cash flow, net cash and shareholders’ equity ratio.

• Free cash flow on the left hand side of the slide was 594.1 billion yen,

exceeding the Company’s original target significantly due to

company-wide cash generating measures.

• As a result, net cash on the right hand side of the slide was minus

47.6 billion yen at the end of fiscal 2014, showing a major

improvement which exceeded the Company’s mid-term target of

minus 220.0 billion yen.

• Furthermore, shareholders’ equity ratio was 29.7%, making a

substantial improvement from the end of fiscal 2013.


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• Next, financial forecast for fiscal 2015.


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• Consolidated group sales of 7,750.0 billion yen and operating profit

of 310.0 billion yen for fiscal 2015 are forecast, showing moderate

increases from last year.

• Pre-tax income is expected to be 120.0 billion yen, a decrease from

last year, while net income attributable to Panasonic Corporation is

expected to be 140.0 billion yen, an increase from last year.


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• This slide shows the forecast of operating profit analysis for fiscal 2015.

• Negative impacts on operating profit are as follows:

- Effect of business transfers, including Healthcare business:

10.0 billion yen

- Termination of corporate-wide measures: 50.0 billion yen

- Fixed-cost increase, including strategic investment: 20.1 billion yen

• On the other hand, positive impacts on operating profit are as follows:

- Benefit from restructuring: 55.0 billion yen

- Streamlining which exceeds the impact of price declines:

25.0 billion yen

- Positive impact of exchange rate: 5.0 billion yen

• As a result, overall operating profit is projected to increase by 4.9 billion

yen.

• The impact of sales increase/decrease on profitability in real terms is

not shown in this chart. This is because sales fluctuations are expected

to be small, if impacts of exchange rate variability and business

transfers are excluded.


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• Next, operating profit analysis by segment.

• Operating profit in Eco Solutions is expected to be lower due to decreasing demand after strong sales in fiscal 2014 prior to the consumption tax increase in Japan. The decrease in ‛Other’ is forecast due mainly to business transfer.

• Results by segment follow later.


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• Profit improvement in major challenging businesses is expected to contribute significantly to the overall operating profit increase. Other factors are also shown here.


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• Next, pre-tax and net income analysis.

• Pre-tax income is expected to be 120.0 billion yen as business

restructuring expenses of 90.0 billion yen are planned.

• Net income attributable to Panasonic Corporation is forecast to be

140.0 billion yen as a decrease of 120.0 billion yen in valuation

allowances to deferred tax assets for Panasonic Corporation on a

consolidated basis is expected.


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• Next, forecasts of free cash flow and net cash.

• In fiscal 2015, the Company continues to generate cash through

Company-wide activities, aiming for free cash flow of more than

100.0 billion yen.

• With these activities, net cash is expected to be positive.


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• Next, changes in segments.

• Firstly, associated with reorganization of Appliances Company, some

businesses have been transferred to this Divisional Company from

other segments and this is reflected in the fiscal 2015 forecasts,

shown here.

• Following unification of all consumer electronics businesses in

Appliances Company, with regard to consumer-related business,

only the Appliances segment will be disclosed on a production and

sales consolidated basis.

• Secondly, the disclosure of information for the range of Business

Divisions will be changed as a consequence of the results of fiscal

2014 and the new business structure following the reorganization of

the Divisional Companies.


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• This chart shows the comparison of fiscal 2014 results in new and

old segment frames. Forecasts for fiscal 2015 will use the ‛new

segment’ basis.


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• Full year forecasts for fiscal 2015 on a new segment basis are shown

here.

• Next, forecasts by segment.


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• First, Appliances based on a production and sales consolidated.

• Sales are expected to decline slightly by 1% compared with the

previous year. Favourable overseas sales and BtoB business

expansion including cold-chain would not be able to offset the impact

of decrease in demand after the consumption tax increase in the

consumer electronics business in Japan.

• On the other hand, overall operating profit is forecast to increase due

to profitability improvement in challenging businesses including air-

conditioners and TVs.


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• Next, Eco Solutions.

• Although housing improvement-related business and overseas sales

are expected to increase, overall sales is forecast to decrease by 2%

from last year due to lower new housing starts in Japan after the

consumption tax increase.

• Operating profit is expected to be lower due mainly to weaker sales

and price decline centering on solar panels.


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• Main business of AVC Networks is now BtoB solutions following re-

organization.

• Overall sales will be affected by lower sales including PDPs and

smartphones for consumer use due to restructuring of challenging

businesses. However, based on core technologies such as imaging,

communications , and downsizing/ruggedization, the Company will

expand its solution business for a wide range of industrial customers

such as convenience stores and logistics. Accordingly, sales are

expected to increase by 1% on last year.

• Operating profit is expected to grow due to sales increases in BtoB

business where profitability is relatively higher compared with BtoC

business. The restructuring effect on challenging businesses such as

termination of PDP business will also contribute to overall operating

profit growth.


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• Next, Automotive & Industrial Systems.

• Sales are expected to increase by 1% on last year.

Although sales decrease is projected due to business contraction

such as circuit boards, overall sales are expected to increase due

mainly to a sales increase in batteries for automotive and to the

positive impact of yen depreciation.

• Operating profit is forecast to increase due to improvement in

profitability as a result of restructuring reform. An increase of

profitability in batteries, capacitors and automation controls for the

growing auto and industrial use also will contribute to overall profit

growth.


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• Next, major challenging businesses.

• Sales in Air-Conditioner BD on the left hand side of the slide is

expected to increase by 9% from last year by enhancing overseas

sales centering on China for both household and industrial use.

Operating profit is projected to return to the black due mainly to

improvement of marginal profits through rebuilding business in China

and rationalization.

• Total operating loss in TV/Panel business is shown on the right hand

side of the slide. Although the loss is expected to remain in fiscal

2015, the level of loss will improve significantly from last year.

Profitability in the set/distribution business is predicted to improve

due mainly to sales increase in value-added models and the impact

of rationalization. In the panel business, profitability is also predicted

to increase due to business expansion for non-TV applications and

fixed-cost reductions.


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• Lastly, Semiconductor BD.

• Total sales are expected to increase by 3% on last year due to sales

increases in the automotive and industrial fields. Although operating

loss is likely to continue, the level of loss is set to improve

significantly due to last year’s restructuring reform.


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• Fiscal 2015 is the second year of the Mid-term Plan and the year to

solidify the foundation for achieving the targets.

• As shown here, free cash flow has reached the level where it is

almost achieving the Mid-term plan target ahead of schedule. The

Company will strive to increase free cash flow further in preparation

for strategic investment for the future.

• The Company also continues to implement measures for improving

operating profit. In fiscal 2015, it will endeavour to complete its

remaining business restructuring and strengthen profitability in each

Business Division. At the same time, by planning ahead for the next

step to growth, it will draw up a road map towards achieving the Mid-

term plan target of more than 350.0 billion yen in operating profit.


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• Thank you for your continued support.


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