Panasonic reported a 39 percent decline in its fiscal first-quarter earnings on Thursday, citing lockdown restrictions alongside increasing cost of materials, as reasons for the decline.
The multinational conglomerate, like many other companies, was affected by the covid-19 restrictions that have kept people and workers at home for weeks now. The rising cost of materials induced by various factors out of which the Russia-Ukraine war stands out the most affected Panasonic’s business and washed off profits.
Panasonic continues to stick with its full-year operating profit forecast of 360 million yen, or $2.66 billion, for the fiscal year. The company plans to boost earnings by raising the prices of specific products and reducing costs. Analysts, on the other hand, expect the full-year operating profit to come in at 412 billion yen, according to Refinitiv. Analysts estimate, therefore, surpass the forecast the company has for operating profit for the year.
Commenting on the forecast, Panasonic’s Chief Financial Officer who admitted that the quarterly numbers “look weak” said that “we judged that it is not necessary to make a change to our outlook.”
Operating profit for the quarter ended June 30th came in at 63.7 billion yen, or $470.77 million. It was short of the estimate of 73.3 billion yen that analysts had forecast.
Earlier this year, in the face of ongoing realities, the company said that it would be unable to pass all of the higher material costs to its customers. Customers have reduced their spending as they try to swim against the tide that is inflation and speculated recession, the company said.
Panasonic which supplies electric vehicle market leader Tesla with batteries does not have plans to raise the prices of these batteries. The company is taking this decision although there is an increase in cobalt and other materials needed to make these batteries.