panasonic ir day 2014 · pdf filesales analysis operating profit analysis year-on-year...

Copyright (C) 2014 Panasonic Corporation All Rights Reserved.

Eco Solutions CompanyFY2015 Business Policy

May 21, 2014

Panasonic CorporationEco Solutions Company

President Tamio Yoshioka

Panasonic IR Day 2014

Notes: 1. This is an English translation from the original presentation in Japanese.2. In this presentation, “fiscal year 2015” or “FY15” refers to the year ended March 31, 2015.

2Contents

1. Company Profile

2. Fiscal 2014 Financial Results

3. Towards Fiscal 2019 andFiscal 2015 Financial Forecast

4. Summary


3Contents

1. Company Profile



4. Summary

Outline of Businesses4

Lighting Business Division Energy Systems Business Division

Housing Systems Business Division パナソニックエコシステムズ㈱

Sales : 322.5 billion yenOverseas Sales Ratio: 23%Principal Product & Business・ Residential lighting ・ Institutional and commercial lighting ・ Lamps, lighting devices and

automotive lighting components

Sales : 395.3 billion yenPrincipal Product & BusinessOverseas Sales Ratio: 18%・ Wiring devices and components・ Circuit breakers and distribution

panelboards・ Home automation equipment and

disaster prevention equipment・ PV power generation systems and

storage batteries

Sales : 145.2 billion yenOverseas Sales Ratio: 44%Principal Product & Business・ Air purifiers and ventilating fans・ Bathroom heater/dryer/ventilation

systems ・ Environmental systems and engineering

including air, water and soil purification systems , and energy-related engineering

Sales : 404.6 billion yenOverseas Sales Ratio: 4%Principal Product & Business・ Kitchen furniture, bathroom,

bathroom vanity and sanitaryfittings

・ Interior furnishing and systems,and storage materials

・ Rain gutters and metal exteriorbuilding materials

(Sales are based on FY14 consolidated basis)

Panasonic Ecology Systems Co., Ltd.


#2**#2*#1**

#1*

#1* #1** #1**

Ventilating fans Air purifiersInterior doors Plastic rain gutters

Wiring devices Distribution panelboardsLED lighting fixtures LED lamps

Main Products and Market Shares 5

ライティング事業部エナジーシステム事業部

ハウジングシステム事業部パナソニックエコシステムズ㈱

#1*

* Revenue-based market share in Japan Market shares: estimated by Panasonic as of Q3 FY2014

Lighting Business Division Energy Systems Business Division

Housing Systems Business Division Panasonic Ecology Systems Co., Ltd.

** Volume-based market share in Japan

FY14 Business Composition6

Sales by segment Sales by region

India/Middle East North America

322.5 17%

395.3 21%

404.6 22%

145.2 8%

286.7 16%

292.3 16%

Lighting

Other Companies

Panasonic Ecology Systems Co., Ltd.

Housing Systems

Energy Systems

Japan 87％

Overseas

FY2013:11% → FY2014:13%Additional Sales bySales Companies,“AGE-FREE”Business Unit(nursing care products and service),“IS*”, etc.

(yen: billions) 5％, 3％

2％4％,

*IS=Panasonic Information Systems Co., Ltd.

FY14

1,846.6FY14

1,846.6

OverseasChina/North East Asia Europe/CIS


7Contents

1. Company Profile



4. Summary

FY14 Financial Results8

1,673.2

1,846.61,710.0

FY13Results

+10% +8%

(yen: billions)

Sales

Operating Profit(%)

62.8(3.8%)

95.0(5.1%) 58.0

(3.4%)

FCF 79.8 64.1 28.0

Increase vs. FY13

FY14Results

FY14plan

Sales OP

Increase vs. FY13 All business divisions achieved sales increases by capturing the last minute surge in demand before consumption tax hike in Japan.

All business divisions achieved profit increases. Negative impact of yen depreciation was offset mainly by sales increases and cost reduction initiatives.

*after Viko acquisition


9

1,673.2

＋22.5＋35.7

1,846.6

1,747.9＋52.2

＋63.0

-12.5

95.0

62.8＋7.0 ＋10.0＋15.0

67.0 ＋18.0-3.0 -2.3

9FY14 Financial Results

（yen: billions）

Sales Analysis

Operating Profit Analysis

Year-on-year increase by ＋10％

Year-on-year increase by ＋32.2


Domesticsales increase

Overseassales increase Sales without

effects of last minute surge in demand before consumption tax hike

Exchangerate effects

Effects of last minute surge in demand before consumption tax hike

Year-on-year increase by ＋4.2


Overseassales increase

Streamlining& Price declines

Fixed cost increase, etc.


OP without effectsof last minute surge in demand before consumption tax hike

Corporate-widemeasures

Effects of last minute surge in demand before consumption tax hike

FY13 FY14

FY13 FY14

10FY14-16 Mid-Term Business Strategy

Basic Strategy Ⅰ Strengthen Core Businesses

[Japan] Further strengthen core businessesⅠ－1

[Overseas] Expand business in “AC&I” Ⅰ－2

Basic Strategy Ⅱ New Growth in Engineering Business

Secure profit from core businessesand shift resources to growing business fields

Enhance added-valuein energy management system business

Ⅱ－1

Strengthen shift to engineering & service businessesⅡ－2

CoreBusinesses

GrowingBusiness

Strengthen remodeling businessⅡ－3

(China, India and other Asian countries)

(living space & after-sales services)


11

Sales in Japan 1,600 billion yen (vs. FY14 BP*: +6%)

[Japan] Further strengthen in core businesses

[Overseas] Expand business in “AC&I”

Sales in “AC&I” 166.0 billion yen (vs. FY14 BP*: +20%)

EMS business sales 60.4 billion yen (vs. FY14 BP*: +9%)

Enhance added-value in energy management system business

Engineering business sales 260.0 billion yen (vs. FY14 BP*: +4%)

Strengthen shift to engineering & service businesses

Remodeling business sales 199.0 billion yen (vs. 14 BP*: +1%)

Strengthen remodeling business

（AC&I: China, India and other Asian countries ）

（EMS: Energy Management System）

Core Business

Growing Business

Mid-term Business Strategy: Strategic Initiatives in FY14

*BP=business plan

12Contents

1. Company Profile



4. Summary


Towards FY201913

FY14 Results

Top-line Target of the Panasonic Group10.0

FY19 Target

２.０

２.０

２.０ ConsumerElectronics

Housing

Auto

BtoBSolutions

Device

２.５

１.５

7.7

１.４

１.２

１.８

１.４

１.８

Aiming for growth with 5 business areas

ＥＳCompany

０.８+α

１.５

(yen: trillions)

2.0 trillion yen: Total amountcombinedwith PanaHome

14

１.４１.７

◆ Remodeling business◆ HEMS-related business◆ Overseas strategic areas

( ASEAN countries, China, Turkey and India)

◆M&A and business alliance

０.６０.７

０.１＋α

０.３＋α

Lead the group with PanaHome in ‘housing-related sales target of 2 trillion yen’

Expand non-housing and non-construction-related businessesto attain ‘2.5 trillion yen sales target in BtoB solution business’

Discontinuous top-line growth

Top-line growth in core business

(Based on new segment basis )

(Based on new segment basis )

(yen: trillions)

(yen: trillions)

FY14 FY19

PH* 0.3 PH* 0.5*PH=PanaHome

FY14 FY19

◆ Develop new businesses2020 Olympics/Paralympics businessIntegrated resort-related business

Discontinuous top-line growth

Top-line growth in core business ◆ Expand engineering business◆ Strengthen non-housing energy management

system business ◆ Overseas strategic areas

( ASEAN countries, China, Turkey and India)

Towards FY2019


Market Trends15

New Housing Starts Forecast US Dollar to Japanese Yen Exchange Rate

(10,000 dwelling units)

FY14 FY15

Japan

・ New housing starts in Japan estimated to drop significantly in FY15 ・ Negative impact on profit due to progressive depreciation of yen（Sensitivity of the yen depreciation against the dollar: Operating loss of one billion yen a year）

Overseas

・Emerging countrieslikely to maintaintheir relatively-high GDP growth ratesdespite economicslowdowns

98.7

82.4

（％）

024

68

10

2011 2012 2013 2014

China

IndiaASEAN-5CountriesTurkey

85

90

95

100

105

110

Oct.

(yen)

Jul.Apr.Jan.Jul.Jan.

Progressive Depreciationof the Yen

2013 2014

106

98

108

99

110

100

Planned exchange rate for FY15: 1US$=105 yen

Source：Japan Center for Economic Research

83％

Source： The Japan Research Institute, Limited

GDP growth rate

(FY) Source： IMF

FY2015 Financial Target16

FY14(Results)

FY15(Plan)

vs. FY14

Sales 1,674.4 1,637.0 -2%

Operating Profit(％)

92.1(5.5%)

62.5(3.8%)

-29.6

FY14(Results)

FY15(Plan)

Accumulated total

(FY14 - FY15)

Free CF 58.9 37.5 96.4

(yen: billions)

(based on new segment basis)

Changes in Organizations1. Transfer of three companies under Marketing Division to Appliances Company2. Transfer of PNA’s AV solution business to AVC Networks Company (PNA: Panasonic North America)3. New consolidation of two companies: ViKO (by acquisition) and Panasonic AGE-FREE Services

(by incorporating the Company into AGE-FREE Business Unit)


17

ES Company to sustain business growthExcept in the rebound of consumption tax hike

＋32.9

＋30.0－26.0

FY14 FY15

1,611.4

1,637.0

1,530.0*

1,628.3

1,674.4－63.0

＋8.7

:* Exchange rate of the mid-term management plan

－20.0

FY15 Financial Target (Sales Analysis)

(Based on new segment basis )（yen: billions）

Year-on-year decrease by －2％


Results Plan Mid-termmanagement plan

Rebound oflast minutesurge in demandbefore consumption tax hike

Sales without effects of last minute surge in demand before consumption tax hike

Effects of domesticmarket demanddecrease

Price declines




92.1

18

－5.0

＋0.9

＋8.5

＋10.0 －8.0 62.564.1－8.0

57.7*

－10.0

－18.0

FY15 Financial Target （Operating Profit Analysis）

(Based on new segment basis )（yen: billions）

Year-on-year difference －29.6

Year-on-year difference －16.0

Results Plan

Mid-termmanagement plan

OP without effects of last minute surge in demand before consumption tax hike and corporate-wide measures

FY14 FY15:* Exchange rate of the mid-term management plan

Rebound oflast minutesurge in demandbefore consumption tax hike, etc.

Corporate-widemeasures

Effects of domesticmarket demanddecrease



Fixed cost reduction, etc.


Streamlining& Price declines


FY15 Major Business Initiatives19

◆ Strengthen remodeling business

◆ Expand “Age Free”(elderly care) business

◆ Develop smart cities

◆ Expand home energy management system business

◆ Develop “ACTION 3000” project

Towards sales target of 2 trillion yen in housing-related business in FY2019Growth in housing-related business Ⅰ

Growth in non-housing / non-construction-related businessesTowards sales target of 2.5 trillion yen in B2B solutions business in FY2019Ⅱ

◆ Expand engineering business

◆ Strengthen non-housing energy management system business

◆ Drive forward the project to providesolutions for reconstruction of the Tohoku region in Japan

◆ Prepare for 2020 Olympics and Paralympics-related business, and integrated resort-related business

ⅢStrengthening management foundation for growth acceleration

◆ Strengthen solar business

◆ Strengthen LED lighting business competitiveness

◆ Expand investment for business growth

◆ Reap the full benefits of structural reforms

2020FY15 Major Business Initiatives:

Growth in Housing-related Business

Strengthen Remodeling Business

◆ Standardize HEMS and develop newservices

“Passive & Active”

＜“Active” energy management＞・Accelerate introduction of “Smart Cosmo”, home-use distribution panelboards

・Enter solar aggregation business

◆ Expand product line-ups

Launched in April, 2014

300.0

199.0216.0

140.0

60.4 61.4

＜“Passive” energy management＞・Exterior and interior thermal insulation panels ・Heat exchange ventilation systemand air purifiers to improveindoor air quality

Japan

(401 shops in FY2014)FY14 FY19

TargetFY15Plan

FY13

173.0 39.0

FY14 ⇒ FY15+17.0

・ Expanding strategic storesfor remodeling, “Refine shop” to 500 shops by FY2016

・ Renovating showroomsto improve services forremodeling

・Water-related equipment: middle-to-high-end products

・Interior furnishing materials: for remodeling

・Lighting fixtures: LED lighting products (e.g. “MiLook”)

“Active” energy management sales

Expand Home Energy ManagementSystem Business Japan

New flooring materials

Launched in April, 2014

New LED lighting fixtures

“MiLook”

◆ Strengthen customer care

（yen: billions）

Remodeling sales

“Smart Cosmo” TM

“SMARTHEMS”®

（yen: billions）

FY14 ⇒ FY15+1.0

FY14 FY19Target

FY15Plan

FY13

*Smart Cosmo is a registered trademark of the Panasonic Group(under application).

*SMARTHEMS is a registered trademark of the Panasonic Group.


◆ ＡSEAN・Increasing the market share of electrical construction material products by leveraging the strength ofour sales routes

◆ Ｃhina・Increasing sales of lighting products

and wireing devices・Developing air purifiers that are best suitable for

the local needs

◆ Ｔurkey・Capturing the C type

wiring device market

・Positioning Turkey as new strategic strongholds to enter into CIS and NorthAfrican markets

◆ Ｉndia

・ Developing the high volume zone products

・ Expanding lighting business

21FY15 Major Business Initiatives:

Growth in Housing-related Business

Focus on the growing markets(strategic areas) (ＯＮ)

FY19 sales target: 300billion yen

（Sales: 11.5 billion yen,New Consolidation of “ViKO”）

(Sales: 35.3billion yen, vs. FY14 +17％)

Results

（Sales: 53.3billion yen, vs. FY14 +7％）

（Sales: 50.7billion yen, vs. FY14 +4％）

300.0

166.0199.0

142.0

11％ 13％17％

Sales in the overseas strategic areas

（yen: billions）

FY14 ⇒ FY15+32.4

＜Overseas Sales Ratio＞

Focus on “ACTION 3000” project Overseas Expand “Age Free”(elderly care) business ◆ Expand business bases and services ・Increasing day care service and multi-function

care service facilities

FY15

14 buildings

FY19

100 buildings

Housing forthe elderly

50.0

26.330.824.3

Japan

Develop smart cities

◆ Horizontal development of the know-how on “Fujisawa SustainableSmart Town”

Dalianand

Malaysia

All over Japan, China and Southeast Asia

Design support

◆ Elderly housing with supportive service business

・Establishing Panasonic Comheart Co., Ltd.

FY14 FY15FY13 FY19TargetPlan

Elderly housingwith supportive service

Multi-function care service facilities

nursing-care Services

24 hours a day, every day

Japan Overseas

FY14 ⇒ FY15+4.5

Sales in the “Age Free” business （yen: billions）

Evaluation of business profitabilityand demonstration experiment

FY14 FY19Target

FY15Plan

FY13

・Expand maintenance business with remote monitoring services for building equipment and systems

2222

Interior furnishingsolutions for homes

China

ASEAN countriesIndia and

ASEAN countries

13.4 billion yen（vs. FY14 -1％）

7.8 billion yen（vs. FY14 +28％）

Remote alarm monitoring

Poweroutputmonitoring

Rush Services

Expand Engineering Business

Photovoltaic solutions（NPC/EPC）

Growth in Non-housing- related / Non-construction-related Businesses FY15 Major Business Initiatives:

*O&M： Operation & Maintenance

OverseasJapan◆Strengthen non-housingrenovation business and enhance growth in maintenance business・Promote the continuous businesses in terms of business life cycle strategy

*LCP: Life Cycle Plan

Delivery of productsand maintenanceservices

Presentationof renovationplan

Proposalof LCP

Startingrenovation works

O&M for solar power generation system

Visualizationof the operational status

ErrorReport

Confirmation report of the operational status

◆Create new business modelsand develop business operationsthat are best suited to customer needs in each country and region

8.3billion（vs. FY14 +14％）

North America

Firepro Systems Pvt. Ltd.Fire solutions

Energy saving and water purification solutions for factories

27.0 29.514.5

38.0

Overseas sales in the engineering business

Rush Services

FY14 FY15Plan

FY13 FY19Target

（yen: billions）

FY14 ⇒ FY15+2.5

80.5 86.876.2

95.0

Sales in the engineering business in Japan

（yen: billions）

FY14 ⇒ FY15+6.3

FY14 FY15Plan

FY13 FY19Target

＊NPC：New Power Company＊EPC：Engineering, Procurement

and Construction

Remote monitoring for storage battery system


23

◆Reinforce earlier activitiesfor product specification verification and approval foradvanced urban development andsocial infrastructure improvement

・ Shift to the continuous business from proposing-and-selling-individual-product

Hotels

Restaurants

Amusement facilities

Exhibition halls

Recreational facilities

Conference halls

◆Develop solutions business for integrated resorts

◆Propose energy creationand energy storage linkagesystem and develop BEMS business・ Propose energy creation and energy storage

linkage energy management system by leveraging green new deal fund

Visualization

IndividualProducts

Systems

Drive forward the Project to Provide Solutions for Reconstruction of the Tohoku Region in Japan

◆Entire Panasonic group contribute tothe reconstruction

Safety and piece of mind Energy

Tsunami observation system

FY14 Sales：3.3billion yen（Results）

Strengthen Non-housing Energy Management System Business

Japan Japan

Prepare for the 2020 Olympics-and-Paralympics-related Business and Integrated Resort-related Business

Hotels/commerce facilities/redevelopment projects

Olympic arena-related facilities Social infrastructures,including roads, railroads, communication facilities,etc.

FY15 Sales：5.0billion yen（Planned）

Equipped mainly in public facilities for disaster prevention

PV LiB

Solar street light

PV power generation system

LED lighting

Disaster prevention/energy managementsystems

Other Companies’s products

Maintenance

Replacementof equipment

Growth in Non-housing- related / Non-construction-related Businesses FY15 Major Business Initiatives:

®®

・ Increase sales by expanding the product lineup,including “HIT Solar Panel Half Type,” Double-sidedType (“HIT Double”）, multi-string PV inverter andenergy creation and energy storage linkage energymanagement system

・ Commoditization and price declineby new entrants from outside

24

【Market environment （vs. FY14）】

【Business strategy】・ Appeal No.1 amount of power generated by solar

panels on roofs in Japan to customers by leveraging advantage of technologies behind world's highestenergy conversion efficiency

HIT250α HIT Half 120α

Starting order entry from June, 2014Lib

Powerstation

HEMS

【Market environment】

【Business strategy】・ Secure profits by streamlining procurement

and production rationalization(modularity, use of EMS, improvement ofproduction process)

・ Strengthen product lineup by market segment

・ Develop new business in non-housing- relatedand non-construction-related areas

Space Player（Lighting space design）

【Stores】【Outdoor】【Facilities】【Homes】

Lighting forrailroad cars

FY13 FY14 FY15

46％ 69％ 82％

・ Lower price of the Feed-In tariff and price declineof the products due to termination of the subsidyprogram （-13％ per year）

・ Lower profit (-5.4 billion yen) due to Yen depreciation（96⇒105/US$）

FY13 FY14 FY15

（MW） 536 835 752

EMS：Electronic Manufacturing Service

Develop Future Solar Business Strategy Enhance Lighting Business Competitiveness

Strengthening Management Foundation for Growth AccelerationFY15 Major Business Initiatives:

LED lightingsales ratio

(Shipment volume basis)

Multi-string PV inverter

Sales of PV

*HIT is a registered trademark of the Panasonic Group.

・ Reduce costs by implementing streamlining steadilyand maintain profitability


25

Expand Investment for Business Growth

Reap the Full Benefits of Structural Reforms

・ Marketing-related investment to strengthenthe remodeling business（6.5 billion yen）

FY14 FY15

42.3

47.144.0

50.8

Investment in showrooms - To expand the remodeling services - To renovate showrooms

◆ Expand marketing-related investment within depreciation

IT-related investment- To equip the tablet PCsat the business sites

◆ We have completed structural reforms and continue with the next phase ofreaping their full benefits.

・ Rebuilding manufacturing systems of lighting and solar businesses - Establishment of new lightning source company in Japan- Closure of Hungarian factory and production reduction at Oregon factory

in solar business

（yen: billions）

Cap

ex

Dep

reci

atio

n

Strengthening Management Foundation for Growth AccelerationFY15 Major Business Initiatives:

26Contents

1. Company Profile



4. Summary


27

ES Company is on truck to sustain the growth momentumin FY2015 and will accelerate its growth steadily towardsachieving the target for FY2019.

FY14 FY15(Plan)

Sales 1,674.4 1,637.0

Operating Profit(%)

〔〕: OP Margin except otherCompanies’s products

92.1(5.5%)〔5.8%〕

62.5(3.8%)〔4.1%〕

FCF 58.9 37.5

FY13 FY14 FY15(Plan) FY19(Target)

Sales1,501.0

1,611.4*1,637.01,674.4

Summary（yen：billions）(Based on the new segment)

+α

800.0

Housing-related Business

（2,000.0）* 2,000.0: when sales of PanaHome are added

1,500.0

BtoB-related Business

*1,611.4 billion yen: Sales without effects of last minute surge in demand before consumption tax hike


Disclaimer Regarding Forward-Looking StatementsThis presentation includes forward-looking statements (that include those within the meaning of Section 21E of the U.S.

Securities Exchange Act of 1934) about Panasonic and its Group companies (the Panasonic Group). To the extent that statements in this presentation do not relate to historical or current facts, they constitute forward-looking statements. These forward-looking statements are based on the current assumptions and beliefs of the Panasonic Group in light of the information currently available to it, and involve known and unknown risks, uncertainties and other factors. Such risks, uncertainties and other factors may cause the Panasonic Group's actual results, performance, achievements or financial position to be materially different from any future results, performance, achievements or financial position expressed or implied by these forward-lookingstatements. Panasonic undertakes no obligation to publicly update any forward-looking statements after the date of this presentation. Investors are advised to consult any further disclosures by Panasonic in its subsequent filings under the Financial Instrument and Exchange Act of Japan (the FIEA) and other publicly disclosed documents. .

The risks, uncertainties and other factors referred to above include, but are not limited to, economic conditions, particularly consumer spending and corporate capital expenditures in the United States, Europe, Japan, China, and other Asian countries; volatility in demand for electronic equipment and components from business and industrial customers, as well as consumers in many product and geographical markets; currency rate fluctuations, notably between the yen, the U.S. dollar, the euro, the Chinese yuan, Asian currencies and other currencies in which the Panasonic Group operates businesses, or in which assets and liabilities of the Panasonic Group are denominated; the possibility of the Panasonic Group incurring additional costs of raising funds, because of changes in the fund raising environment; the ability of the Panasonic Group to respond to rapid technological changes and changing consumer preferences with timely and cost-effective introductions of new products in markets that are highly competitive in terms of both price and technology; the possibility of not achieving expected results on the alliances or mergers and acquisitions including the business reorganization after the acquisition of all shares of Panasonic Electric Works Co., Ltd. and SANYO Electric Co., Ltd.; the ability of the Panasonic Group to achieve its business objectives through joint ventures and other collaborative agreements with other companies; the ability of the Panasonic Group to maintain competitive strength in many product and geographical areas; the possibility of incurring expenses resulting from any defects inproducts or services of the Panasonic Group; the possibility that the Panasonic Group may face intellectual property infringement claims by third parties; current and potential, direct and indirect restrictions imposed by other countries over trade, manufacturing, labor and operations; fluctuations in market prices of securities and other assets in which the Panasonic Group has holdings or changes in valuation of long-lived assets, including property, plant and equipment and goodwill, deferred tax assets and uncertain tax positions; future changes or revisions to accounting policies or accounting rules; as well as natural disasters including earthquakes, prevalence of infectious diseases throughout the world, disruption of supply chain and otherevents that may negatively impact business activities of the Panasonic Group. The factors listed above are not all-inclusive andfurther information is contained in the most recent English translated version of Panasonic’s securities reports under the FIEA and any other documents which are disclosed on its website.

In order to be consistent with generally accepted financial reporting practices in Japan, operating profit (loss) is presented in accordance with generally accepted accounting principles in Japan. The company believes that this is useful to investors in comparing the company's financial results with those of other Japanese companies. Under United States generally accepted accounting principles, expenses associated with the implementation of early retirement programs at certain domestic and overseas companies, and impairment losses on long-lived assets are usually included as part of operating profit (loss) in the statement of income.

panasonic ir day 2014 · pdf filesales analysis operating profit analysis year-on-year...

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