Panasonic: finding new clients should come before heavy spending on capacity
Financial Times
23-05-19 13:21
Japanese electronics group Panasonic risks ramping up investment too quickly as it seeks to double capital spending to a record ¥700bn ($5.1bn) for the fiscal year to March. Over half the sum will fund expansion of electric vehicle (EV) battery production. Panasonic was once best known for its LCD televisions, leading to large investments in plasma and LCD technology that ended in failure when cheaper Chinese competitors entered the market, causing the company to withdraw from LCD panel and solar cell production. Panasonic has invested heavily in EV batteries and is the world’s fourth-largest producer and one of Tesla’s leading suppliers. However, US tax credits have accounted for much of the company's net profit increase. Shares currently trade at a discount, with a forward earnings ratio of 12 compared to local competitors. Its heavy investment in production capacity ending in failure after competition entered the market caused the company to withdraw from all LCD panels production in 2012 and also withdraw from solar cells and sell its semiconductor business.