- To focus on ongoing management reforms, exit from unprofitable business segments, and the establishment of a more agile business model responsive to market changes.
- By becoming a leaner and more adaptive enterprise, Panasonic aims to strengthen its competitive position and return to sustained profitability in an increasingly complex global market.
- Panasonic plans to capitalise on the global shift towards electrification and sustainable transportation, sectors that are expected to expand significantly in the coming years.
Panasonic’s announcement to reduce its global workforce by 10,000 employees, evenly split between Japan and overseas, signifies a strategic move towards creating a more streamlined and efficient organisation.
With a current workforce of approximately 230,000, this reduction of about four per cent underlines the company’s commitment to restructuring amid challenging economic conditions and evolving market demands.
The planned job cuts involve a combination of early retirement offers in Japan and the closure or consolidation of several operational units. This approach reflects Panasonic’s intention to optimise its resources and focus on leaner management practices.
As a diversified manufacturer, Panasonic’s portfolio spans traditional home appliances such as washing machines and refrigerators, as well as advanced technological products including solar panels, delivery robots, facial recognition systems, hydrogen fuel cells, and electric vehicle (EV) batteries used by Tesla.
This broad product range, while representing varied revenue streams, also demands adaptability in a rapidly changing global economic environment.
Long-term turnaround strategy
The company’s financial results for the fiscal year ending in March revealed a 17.5 per cent decline in profit, down to 366 billion yen ($2.5billion) from the previous year’s 443 billion yen.
Similarly, sales experienced a modest decrease of 0.5 per cent, totaling 8.46 trillion yen ($58 billion). These figures were attributed to a slowdown in the global economy and reduced demand for electric vehicles, key markets for Panasonic’s cutting-edge technologies.
However, the company noted stable sales within Japan, particularly in the air-conditioner and consumer electronics sectors, illustrating the resilience of its domestic business amidst global uncertainties.
Despite these setbacks, Panasonic’s leadership remains focused on a long-term turnaround strategy. Chief Executive Yuki Kusumi expressed a heavy heart over the difficult decision to cut jobs but underscored its necessity for sustainable growth.
Notably, the company’s financial challenges were not publicly attributed to external trade policies, such as tariffs implemented by the US administration, suggesting that internal business dynamics and broader market trends are the primary concerns.
Growth strategy
Looking ahead, Panasonic projects a significant improvement in profitability by the fiscal year ending March 2027, with an expected increase of at least 150 billion yen ($1 billion), and a further rise to 300 billion yen ($2.1 billion) by 2029.
Achieving these targets hinges on ongoing management reforms, the exit from unprofitable business segments, and the establishment of a more agile business model responsive to market changes.
Nevertheless, the path to recovery is gradual, with further profit declines anticipated in the current fiscal year, projected at 310 billion yen ($2.1billion) on sales of 7.8 trillion yen ($54 billion).
A key element of Panasonic’s future growth strategy involves deepening its engagement in the electric vehicle sector.
The company has announced new strategic partnerships with prominent Japanese automakers Mazda and Subaru to supply EV batteries, building upon its existing relationship with Tesla.
These alliances position Panasonic to capitalise on the global shift towards electrification and sustainable transportation, sectors that are expected to expand significantly in the coming years.