Panasonic Holdings Corporation (PCRFF) Q3 2025 Earnings Call Transcript

2025-02-07 05:24:18 ET

Panasonic Holdings Corporation (PCRFF)

Q3 2025 Earnings Conference Call

February 04, 2025 01:30 AM ET

Company Participants

Hirokazu Umeda - Group Chief Financial Officer

Yuki Kusumi - Group CEO

Conference Call Participants

Ryo Harada - Goldman Sachs

Junya Ayada - JPMorgan

Ryosuke Katsura - SMBC Nikko

Yu Okazaki - Nomura Securities

Kota Ezawa - Citigroup Global Markets Japan

Yasuo Nakane - Mizuho Securities

Presentation

Hirokazu Umeda

I will now go over the results for the third quarter of the fiscal year ending March 2025. First, major change in our financial statements. We recently announced the completion of the share transfer of Panasonic Automotive Systems, PAS. As a result, in December 2024, PAS has become a company under the equity method and is excluded from the scope of consolidation. Accordingly, the figures of businesses that are not subject to the share transfer of PAS are recorded in other eliminations and adjustments and figures for both FY '25 and FY '24 are reclassified. On this basis, I will give the summary of the Q3 results.

Both sales and profit increased year-on-year, excluding Automotive, despite decreased sales due to the deconsolidation of Automotive. Looking at sales of each business, major positive factors included favorable sales of generative AI-related products in Industry and Energy. In Lifestyle, air-to-water, after experiencing tough conditions turned to a year-on-year increase and sales of electrical construction materials were favorable.

Adjusted operating profit increased with higher profit in Lifestyle, Connect, Industry and Energy despite the impact of deconsolidation of Automotive. Operating profit also increased. Net profit decreased, due mainly to an increase in income taxes. For the full-year forecast, even with the deconsolidation of Automotive, the group-wide profit forecast remains unchanged. Only the sales forecast is revised downward. By segment, the forecast of Industry and Energy is revised upward. Generative AI-related businesses continue to be favorable in Q3 and their high growth is expected to continue for the full-year.

Now the details of the Q3 results. From the Q3, the consolidated results are shown on the basis of excluding the impact of the Automotive deconsolidation. Sales decreased year-on-year by 1% to JPY 2,152.6 billion. Excluding Automotive, sales increased by 5%. AOP increased to JPY 150.2 billion and OP increased to JPY 132.3 billion. Net profit decreased to JPY 99.5 billion.

Results by segment. In the next slides, I’ll explain the year-on-year variance analysis for sales and operating profit. First, sales variance analysis by segment. Lifestyle sales increased overall, driven by HVAC, electrical construction materials and consumer electronics. Sales of air-to-water in Europe after experiencing tough conditions turned to a year-on-year increase due mainly to improved distribution inventories. Sales of consumer electronics in China recovered to the same level year-on-year, including the effect of subsidies.

The decreased sales of automotive is due to the impact of deconsolidation. Connect sales increased with increased sales of Process Automation, capturing demand for ICT industry in China, as well as increased sales of Blue Yonder, Gemba Solutions and Avionics. Industry sales increased with increased sales of products for information and communication applications such as generative AI servers despite decreased sales of Automotive industrial use relays due to market slowdown mainly in Europe....

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