Panasonic keeps profit outlook flat amid price rises, shortages

© Reuters. FILE PHOTO: A logo of Panasonic Corp is pictured at the CEATEC JAPAN 2017 (Combined Exhibition of Advanced Technologies) at the Makuhari Messe in Chiba, Japan, October 2, 2017. REUTERS/Toru Hanai

TOKYO (Reuters) -Panasonic Corp said on Wednesday it expected operating profit growth to be flat this business year as component shortages and rising material costs continued to pose a risk to earnings.

The Japanese company forecast operating profit of 360 billion yen for the year to March 31, 2023, little changed from the 357 billion it made in the previous business year.

That prediction is 5.9% lower than a mean 382.7 billion yen profit based on forecasts from 20 analysts, Refinitiv data shows.

Panasonic (OTC:PCRFY) makes products ranging from washing machines to industrial machinery.

Like others, it has been hurt by materials prices that shot higher after Russia's invasion of Ukraine. Chief Executive Officer Yuki Kusumi said last month the company could not pass all of the price rises on to customers.

It has also been tackling continued shortages of components caused by the COVID-19 pandemic, with strict lockdowns in China spurring concerns of fresh supply chain disruptions.

For its Energy unit, which makes automobile batteries for Tesla (NASDAQ:TSLA) Inc, it expects electric vehicle demand to grow and will try to mitigate the higher cost of metals, including lithium, nickel and cobalt, through "price revisions" and "rationalization". It did not elaborate on that point.

Panasonic also noted risks of suppliers' factory lockdowns due to COVID-19 and the international situation.

Panasonic supplies batteries to Tesla along with China's Contemporary Amperex Technology Co Ltd and South Korea's LG Energy Solution. It plans to build a mega-factory in the United States to build a new and more advanced battery for Tesla, Japanese public broadcaster NHK reported in March.

The battery, of 4680 format (46 millimetres wide and 80 millimetres tall), is about five times bigger than those that Panasonic currently supplies, meaning Tesla should be able to lower production costs and improve vehicle range.

In the three months to March 31 Panasonic posted operating profit of 83.3 billion yen, compared with a profit of 31.8 billion yen a year earlier. That result was worse than an estimated mean of 85.5 billion yen profit from nine analysts surveyed by Refinitiv.