Panasonic hints at an improvement in profitability by increasing productivity and utilization at its factory in North America (Tesla Gigafactory 1)
Panasonic released financial results for the first quarter of 2019 and the full FY 2019 (in Japan from April 1, 2018 to March 31, 2019) and in brief, the company is profitable, but not happy with its outcome in the automotive business.
During FY 2019, profits in the Automotive & Industrial Systems category, which includes lithium-ion batteries, decreased 37% year-over-year, despite a 7% increase in sales. It's the biggest decrease among all segments.
Panasonic 2019 FY results
The next slide brings us insights into what is going. Panasonic expects that Automotive sales will increase in FY 2020 (which already started in April) by 4%, but the operating profits will be negative (-1%).
The Japanese company is willing to produce more lithium-ion batteries (both more prismatic and more cylindrical types), but the overall automotive segment is unprofitable (expected loss).
To deal with the problems, Panasonic plans to increase the production of prismatic cells in China, where the plant in Dalian needs to produce more, while the new Himeji plant needs to start mass production.
"Upfront investments for future growth
・Start mass production of batteries for PHEV & EV at Himeji factory and improve productivityat early stage.
・Expand production and improve efficiency at Dalian factory. Achieve profitability at earlystage through labor-saving initiatives."
In terms of cylindrical cells at the Tesla Gigafactory in Nevada, Panasonic expressed the need to increase productivity and utilization. Hopefully, it will reach the promised 35 GWh annually.
"Improve profitability by increasing productivity and utilization at factory in North America."
2020 FY forecast
The forecast for the period ending on March 31, 2020 brings a decrease in sales (-1%) and operating profits (down by a more than a quarter), which will put pressure on the currently unprofitable automotive segment.
New Mid-term Strategy
Because of all of the above, Panasonic is gearing up a new mid-term strategy, repeating the word revitalization of the battery business, including a joint venture for prismatic batteries with Toyota.