Japan’s Panasonic Corp cut its full-year outlook for operating profit on Monday due to a strong yen, lower sales of smartphone and personal computer parts and weaker demand for solar power systems.
The electronics manufacturer forecast group profit of 245 billion yen ($2.34 billion) for the year ending March 31, down from a previous estimate of 310 billion yen under international financial reporting standards (IFRS).
The forecast compared with a Thomson Reuters Starmine SmartEstimate of 297.30 billion yen drawn from 16 analyst estimates.
It also said it expects the yen to trade at an average of 103 yen to the U.S. dollar and 114 yen to the euro this financial year, rather than at its previous forecasts of 115 yen and 125 yen respectively.
Panasonic will report earnings under international standards from the next business year, rather than U.S. standards.
A previous profit forecast under U.S. standards already represented a first drop in five years, coming as the firm plans to spend more on increasingly lucrative automotive technologies and housing businesses.
Panasonic has reinvented itself as a provider of auto parts, batteries and energy-saving home systems to escape the price competition of smartphones and lower-margin consumer products.
But its latest profit revision shows that even one of the strongest of Japan’s consumer electronics companies is struggling to expand as growth in emerging markets slows.
Businesses that Panasonic sees as its next profit drivers, such as automotive parts and housing, need upfront investment and squeeze profit in the near term.
Among such investments is Tesla Motors Inc’s $5 billion “Gigafactory”, for which Panasonic plans to contribute up to $1.6 billion to produce electric vehicle and grid storage battery cells.
Panasonic is also considering extending its partnership with Tesla by producing solar cells for the U.S. company. It is expected to begin production at a New York factory being built by SolarCity Corp, soon to be acquired by Tesla.
In July-September, its operating profit under the U.S. accounting standards dropped to 77.7 billion yen from 123.9 billion yen a year earlier, missing a Thomson Reuters Starmine SmartEstimate of 89.98 billion yen drawn from 7 analysts.