FOCUS: Panasonic at Critical Juncture to Break Out of Stagnation

Osaka, May 13 (Jiji Press)–About one year after launching sweeping management reforms aimed at restoring profitability, major Japanese electronics manufacturer Panasonic Holdings Corp. is entering a decisive stage in its turnaround efforts. Over the past year, Panasonic has worked to revamp its cost structure through measures including large-scale job cuts and the sale of business units. While these steps have helped advance its restructuring, the company now faces a broader challenge: developing new businesses that can serve as stable drivers of earnings. Fiscal 2026, which started this month, is thus shaping up to be a pivotal year for Panasonic as it seeks to break free from prolonged stagnation and place its recovery on firmer ground. High-Cost Structure In fiscal 2024, Panasonic posted a consolidated operating profit margin of 5 pct, well below Sony Group Corp.’s 10.9 pct and Hitachi Ltd.’s 9.9 pct. Panasonic President Yuki Kusumi said the company had “lacked sufficient urgency to improve operational efficiency and profitability,” describing its high-cost structure as a major drag on performance. Although Panasonic recorded a consolidated net profit of 366.2 billion yen in fiscal 2024, the company announced in May 2025 that it would cut 10,000 jobs worldwide. Kusumi said the decision reflected a growing recognition that “unless we make major changes, we will not be able to return to growth.” As part of the restructuring, Panasonic has begun consolidating operations across several business areas. In western Japan’s Kansai region, the company consolidated nine logistics sites into a newly built large-scale hub in Kyotanabe, Kyoto Prefecture. In November, Panasonic announced plans to sell an 80 pct stake in its housing equipment subsidiary, Panasonic Housing Solutions Co., to YKK Corp., a major aluminum building materials manufacturer. The restructuring has extended beyond Panasonic’s core businesses. The company’s baseball team, long considered one of the strongest in Japan’s company-sponsored amateur baseball circuit, will suspend activities after the 2026 season. At the same time, Panasonic has indicated that it will continue operating its television and kitchen appliance businesses, both of which had been viewed internally as troubled, low-growth segments. Even so, the company is streamlining those operations. In the TV business, for example, Panasonic has transferred sales operations in Europe and the United States to Chinese appliance giant Skyworth. Data Center Energy Storage Panasonic has traditionally positioned its automotive battery business, along with its air-quality and air-conditioning operations, as key areas for growth investment. Recently, however, the company’s earnings capacity has come under pressure. Sales of automotive batteries have dwindled following the end of electric vehicle subsidies in the United States, while demand for air-to-water heat pump water heaters and heating systems has also weakened. Against this backdrop, Panasonic is turning to its energy storage system business for data centers as a potential new growth driver. The business, operated by its subsidiary, Panasonic Energy Co., is benefiting from robust market demand. To support future expansion, Panasonic is strengthening its supply capabilities, including plans to build a new factory in Mexico. The company aims to achieve annual sales of 800 billion yen by fiscal 2028 and position the business as a new pillar of earnings. Panasonic’s groupwide structural reforms were largely completed in April, marking a significant milestone in its latest restructuring effort. The reforms imposed a heavy financial burden in fiscal 2025, with related costs, including retirement benefit expenses, totaling 180 billion yen. In fiscal 2026, however, Panasonic expects the measures to deliver a 145-billion-yen improvement in earnings. As part of its workforce reduction, the company introduced a voluntary redundancy program that attracted 12,000 applicants, exceeding its initial expectations. Management acknowledges that the impact of the restructuring extends beyond financial metrics. “It would be untrue to say there is no unease at all” among remaining employees, director Akira Waniko said, highlighting unresolved challenges such as maintaining morale in the workplace. Since its founding as Matsushita Electric Industrial Co. by pioneering entrepreneur Konosuke Matsushita, Panasonic has built a global reputation through a diverse portfolio of products and technologies centered on home appliances. The current year is likely to be a critical test as the company seeks to reinvent itself once again as a stronger, more resilient business. END [Copyright The Jiji Press, Ltd.]