Panasonic’s CEO Urges Sense of Crisis Amid Low Profitability
As the global leader in consumer electronics, Panasonic Holdings Corp. is facing a significant challenge in maintaining its profitability. According to CEO Yuki Kusumi, the company’s managers need to feel a stronger sense of crisis to improve results.
The Current State
Panasonic’s shares have taken a hit, dropping 4% this year after climbing 26% last year. This decline comes as the company struggles to meet its profitability targets. Kusumi warned in a strategy briefing that the company would reduce the number of "businesses with issues" to zero by March 2027.
Impact of Slowdown in Electric Car Demand
The slowdown in demand for electric cars has had a significant impact on Panasonic’s battery factories. Production lines at its Suminoe factory in Osaka have been halted, and Kusumi expressed concern over the lack of profitability.
Goal of Improving Profitability
Kusumi aims to improve the profitability of underperforming units over the next two years. He is considering whether Panasonic is the "best owner" for these businesses, suggesting that they may need to stand and survive on their own.
Company Restructuring
Panasonic adopted a holding company structure two years ago to make each division more accountable for its performance. This restructuring has made it easier for Kusumi to forge deals, such as the sale of its automotive systems unit to Apollo Global Management Inc.
Future Plans
Kusumi has set goals to achieve a return on equity of 10% or more and cumulative operating profit of ¥1.5 trillion for the two fiscal years through April of next year. He aims to free up more cash to invest in areas of growth.
The Way Forward
To achieve its goals, Panasonic needs to adopt a more agile approach. Kusumi is urging its managers to feel a strong sense of crisis and to take bold action to improve results.
Conclusion
Panasonic’s struggle to maintain its profitability is a wake-up call for the company. With a renewed sense of crisis and a commitment to improving results, Panasonic can turn its fortunes around and remain a relevant player in the global electronics market.
FAQs
Q: What is Panasonic’s current profit situation?
A: Panasonic’s shares are down 4% this year after climbing 26% last year. The company is struggling to meet its profitability targets.
Q: What is the impact of the slowdown in electric car demand on Panasonic?
A: The slowdown has resulted in the halt of production lines at Panasonic’s Suminoe factory in Osaka, and expressed concern over the lack of profitability.
Q: What are Panasonic’s goals for improving profitability?
A: Kusumi aims to improve the profitability of underperforming units over the next two years and is considering whether Panasonic is the "best owner" for these businesses.
Q: What restructuring measures has Panasonic taken?
A: Panasonic adopted a holding company structure two years ago to make each division more accountable for its performance. This restructuring has made it easier for Kusumi to forge deals, such as the sale of its automotive systems unit.
Q: What is the timeline for achieving Panasonic’s goals?
A: Kusumi has set goals to achieve a return on equity of 10% or more and cumulative operating profit of ¥1.5 trillion for the two fiscal years through April of next year.
Author: fortune.com
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