Sales and Earnings up for Fifth Consecutive Year
OSAKA, Japan -- Apr. 27, 2007 Matsushita Electric Industrial Co., Ltd. (NYSE: MC):
(Note: Dollar amounts for the most recent period have been translated for convenience at the rate of U.S.$1.00 = 118 yen.)
Matsushita Electric Industrial Co., Ltd. (Matsushita (NYSE: MC)) today reported its consolidated financial results for the year ended March 31, 2007 (fiscal 2007).
Consolidated Results
Consolidated group sales for fiscal 2007 increased 2% to 9,108.2 billion yen (U.S.$77.19 billion), from 8,894.3 billion yen in the previous fiscal year. Explaining fiscal 2007 results, the company cited sales gains in digital products, especially V-products. Of the consolidated group total, domestic sales amounted to 4,616.5 billion yen ($39.12 billion), mostly unchanged from 4,611.4 billion yen a year ago. Overseas sales increased 5% to 4,491.7 billion yen ($38.07 billion), from 4,282.9 billion yen in fiscal 2006, ended March 31, 2006.
During the fiscal year under review, the electronics industry faced severe business conditions in Japan and overseas, due mainly to rising prices for crude oil and other raw materials and continued price declines caused by ever-intensified global competition, mainly in digital products. Under these circumstances, in fiscal 2007, the final year of the mid-term management plan Leap Ahead 21, Matsushita has implemented growth strategies and strengthened management structures, thereby achieving a target of the plan.
As part of such efforts, the company aggressively launched and promoted a new series of V-products to capture leading market shares and make a significant contribution to overall business results. Aiming to reinforce its management structures, the company has made all-out efforts to reduce raw materials costs and eliminate redundancies throughout the Matsushita Group.
Regarding earnings, operating profit(1) for this fiscal year was up 11%, to 459.5 billion yen ($3.89 billion), from 414.3 billion yen in the previous year, despite the effects from rising raw materials prices and ever-intensified global price competition. This improvement was due primarily to the cost reduction efforts including materials costs and fixed costs, and a weaker yen. In other income (deductions), the company recorded gains on the sale of the investments regarding cable broadcasting business and proceeds from tangible fixed assets, and incurred restructuring expenses, including 14.2 billion yen ($120 million) associated with the implementation of early retirement programs, and impairment losses. These factors, as well as increased operating profit, led to a consolidated pre-tax income of 439.1 billion yen ($3.72 billion), up 18% from 371.3 billion yen in the previous year. Net income also increased 41% to 217.2 billion yen ($1.84 billion), from 154.4 billion yen from a year ago. The company's net income per common share was 99.50 yen ($0.84) on a diluted basis, versus 69.48 yen in the previous year.
Consolidated Sales Breakdown by Product Category
The company's annual consolidated sales by product category, as compared with prior year amounts, are summarized as follows:
AVC Networks
AVC Networks sales increased 2% to 3,749.4 billion yen ($31.78 billion), from 3,688.3 billion yen in the previous year. Sales of video and audio equipment increased 6% from the previous year, due mainly to strong sales in digital AV products such as flat-panel TVs and digital cameras. Sales of information and communications equipment decreased 2% to 2,079.1 billion yen ($17.62 billion), compared with 2,111.8 billion yen a year ago. Sluggish sales of mobile phones in Japan and overseas for the fiscal year, despite increased sales in automotive electronics, led to overall lower sales in this category.
Home Appliances
Sales of Home Appliances increased 4% to 1,227.4 billion yen ($10.40 billion), compared with 1,183.1 billion yen in the previous year, due mainly to favorable sales of air conditioners and compressors.
Components and Devices
Sales of Components and Devices were also up 4% to 1,126.9 billion yen ($9.55 billion), compared with 1,086.6 billion yen in the previous year, due mainly to favorable sales in general electronic components.
MEW and PanaHome
Sales of MEW and PanaHome increased 8% to 1,698.1 billion yen ($14.39 billion), from 1,570.8 billion yen a year ago. At Matsushita Electric Works, Ltd. (MEW) and its subsidiaries, sales gains were recorded in electrical construction materials and electronic and plastic materials. At PanaHome Corporation, sales of detached housing were favorable, contributing to overall increased sales.
JVC
Sales for JVC (Victor Company of Japan, Ltd. and its subsidiaries) totaled 638.6 billion yen ($5.41 billion), down 9% from 699.0 billion yen in the previous year. This result was due primarily to sluggish sales of AV equipment.
Other
Sales for Other totaled 667.8 billion yen ($5.66 billion), mostly unchanged from a year ago.
Non-Consolidated (Parent Company Alone) Results(2)
Parent-alone sales increased 6% to 4,746.9 billion yen, from 4,472.6 billion yen in the previous year. Regarding parent-alone earnings, operating profit totaled 142.0 billion yen, up 15% from 123.2 billion yen in fiscal 2006. This increase was realized mainly by sales gains and various comprehensive cost reduction initiatives, despite price declines. Recurring profit decreased 35% to 141.6 billion yen, from 216.4 billion yen in the previous year. Despite an increase in operating profit, a decrease in dividend income from affiliates led to lower recurring profit, compared with the previous year. Parent-alone net income increased 383% to 98.8 billion yen, from 20.4 billion yen in the previous year, including gains from the sale of securities of its affiliated company which operates a cable broadcasting business.
Consolidated Financial Condition
Net cash provided by operating activities in fiscal 2007 amounted to 532.6 billion yen ($4.51 billion). This was attributable primarily to cash inflows from net income and depreciation. Net cash used in investing activities amounted to 567.8 billion yen ($4.81 billion). Capital expenditures for tangible fixed assets were 411.3 billion yen ($3.49 billion), mainly consisting of manufacturing facilities for priority business areas such as plasma display panels (PDPs) and semiconductors, while time deposits increased 223.8 billion yen ($1.90 billion) from the end of fiscal 2006 (March 31, 2006). Net cash used in financing activities was 427.7 billion yen ($3.62 billion). Major factors included the repurchase of the company's common stock and the repayment of long-term debt. All these activities resulted in cash and cash equivalents of 1,236.6 billion yen ($10.48 billion) at the end of fiscal 2007, down 430.8 billion yen compared with the end of the last fiscal year.
The company's consolidated total assets as of March 31, 2007 decreased 67.7 billion yen to 7,897.0 billion yen ($66.92 billion), as compared with 7,964.6 billion yen at the end of the last fiscal year (March 31, 2006). Stockholders' equity increased 129.1 billion yen, as compared with the end of the last fiscal year, to 3,916.7 billion yen ($33.19 billion) as of March 31, 2007. This was due primarily to increases in retained earnings and accumulated other comprehensive income, despite an increase in treasury stock on continued repurchases of the company's own shares.
Year-end Dividend
Total dividends for fiscal 2007, ended March 31, 2007, including an interim dividend of 15 yen per common share paid in November 2006, are expected to be 30 yen per common share, as compared with total dividends of 20 yen for fiscal 2006.
Outlook for Fiscal 2008
Regarding the business environment for the fiscal 2008 ending March 31, 2008, the company currently expects to encounter severe conditions, such as continuing price declines and rising crude oil and other raw materials prices, as well as concerns about the global economic conditions, mainly in the United States. Under these circumstances, in fiscal 2008, the first year of the mid-term management plan GP3, Matsushita will actively implement initiatives to accelerate its growth strategies, aiming at steady growth with profitability. The company currently expects fiscal 2008 sales on a consolidated basis to total approximately 9,250 billion yen, an increase of 2% from the previous fiscal year. Consolidated operating profit is forecasted to increase by about 9% to 500 billion yen. Consolidated income before income taxes(3) is anticipated to increase to 460 billion yen, up 5%, with net income expected to improve to 250 billion yen, an increase of 15% from the previous fiscal year.
Matsushita Electric Industrial Co., Ltd., best known for its Panasonic brand products, is one of the world's leading manufacturers of electronic and electric products for consumer, business and industrial use. Matsushita's shares are listed on the Tokyo, Osaka, Nagoya and New York stock exchanges.
For more information, please visit the following web sites:
Matsushita home page URL: http://panasonic.net/
Matsushita IR web site URL: http://ir-site.panasonic.com/