Stay updated with the latest news from Panasonic Corp by subscribing to our free updates.
Get a comprehensive daily email digest, called myFT Daily Digest, featuring all the recent news about Panasonic Corp every morning.
Panasonic has decided to liquidate its subsidiary responsible for producing liquid crystal display (LCD) panels. After years of weak performance, this strategic move by the Japanese electronics group aims to shift its focus towards electric car batteries, a promising sector. This step is long overdue but nevertheless welcomed.
The subsidiary primarily focused on manufacturing LCDs for automotive and industrial purposes. However, intense competition forced Panasonic to exit the TV screen manufacturing market. With this liquidation, the company plans to repurpose the factory into a production base for electric vehicle (EV) batteries.
The first signs of Panasonic’s struggle emerged in 2011 when the company encountered a ¥265 billion ($2 billion) restructuring charge for its TV business, resulting in a significant reduction in flatscreen output. Unfortunately, earnings remained in the red.
The liquidation decision saves investors from further losses as group operating margins have consistently declined over the past five years. Despite a 60% increase in Panasonic’s shares this year, their trading multiple remains low at just 15 times forward earnings. This reflects the negative impact of the consumer electronics business on its profitable battery unit.
Once considered high-value products, flatscreen LCD TVs rapidly transitioned into mainstream commodities, surpassing expectations. Chinese competitors seized Panasonic’s market share, severely impacting unit margins.
There is a similar risk of this pattern repeating in the EV battery market. Chinese peer CATL has already surpassed Panasonic in market share by becoming a key supplier to Tesla. Leapfrog technology advancements also pose a threat, with organic LED panels disrupting the high-end TV industry and new battery materials and solid-state breakthroughs posing continuous challenges for existing manufacturers.
However, for now, Panasonic holds a strong position as one of Tesla’s major suppliers, benefiting from its years of experience in manufacturing popular high-nickel batteries. As the electric car market is still in its early commercialization phase, there is significant potential for growth. Panasonic must maintain its momentum in this sector.
If you are a subscriber and would like to receive alerts when Lex articles are published, just click the button “Add to myFT” above the headline.
Denial of responsibility! VigourTimes is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
