Revenue Down Profits Up At Panasonic OZ As They Transition From Being A Telly Company
Panasonic Australia is in transition mode, after generating 50% of their revenues four years ago selling top end plasma TV’s they are today transitioning to a more balanced revenue stream, that consist of appliances, commercial display and projectors and tough notebooks and tablets claims CEO Paul Read.
The Company that is now cuddling up to specialist solution providers as well as mass retailers is also pursuing profits over revenues a model that is being adopted by their parent Company who last week scrapped its US$89 billion revenue goal, citing a slowing economy and the electronics company’s commitment to pursue profit and not just scale.
In their latest financials lodged in November 2015 Panasonic Australia reported revenues of $426 Million down from the $432 Million reported for the same period in 2014.
Profits rose from $1.1 Million to $11.1 Million which is less than 2.7%, they join Companies such as Google, Apple, and Microsoft who stand accused of not paying their fair share of taxes in Australia.
Read was previously a category head at Panasonic Australia before taking a Managing Director role in Europe. He returned to Australia to replace Steve Rust the former CEO of Ingram Micro Australia who took on the top job at Panasonic Australia.
Shortly before his return Panasonic Australia axed several layers of management.
Read believes that going forward Panasonic can be a major player in several key markets including in the 4K market.
He claims that a combination of 4K TV’s, projectors for both domestic and commercial markets as well as 4K video recording cameras sets Panasonic apart from their competitors.
“We are not abandoning the consumer electronics market in fact CE is a key market for Panasonic. We believe that our 4K offering which will shortly include a 4K native player coupled with our 4K recording is significantly ahead of what a lot of our competitors can offer. We have an excellent appliance offering and we are constantly expanding our appliance range. We actually chose not to invest in TV” said Read.
The latest GFK data show that Hisense is now the #3 TV Brand in Australia behind Samsung and LG.
This was a position once owned by Panasonic in a Yo Yo-ing battle with Sony.
Read claims that another core category for Panasonic Australia is digital cameras and their Lumix camera offering which is currently witnessing significant growth.
It’s been well over a decade since Panasonic set up its Lumix sub-brand in order to get itself a slice of the digital camera business. It was a smart move on the part of the electronics consumer that is equally famous for rice cookers, bread makers, microwaves to large TV’s.
Had Panasonic’s cameras not carried that Lumix name, I doubt the company would have made such an impact in the digital camera market.
However, it wasn’t all down to savvy marketing as the strategy also included making a strategic alliance with Leica and developing a range of very good compact cameras and prosumer models that have proved incredibly popular.
At the upper end of its product range, Panasonic has pursued its policy of sticking to the Micro Four-Thirds format along with fellow Japanese manufacturer Olympus, Nikon were a late comer to the market.
Both Panasonic and Olympus who are facing their own problems, are the only ones doggedly sticking to the niche format that offers lightweight cameras with a sensor that is smaller than the APS-C-sized chips found on models from the likes of Sony, Nikon, Canon and Fujifilm.
Despite Four-Thirds being a niche format, Panasonic have attracted a loyal following from people who swear by this compact system.
Where Panasonic Australia falls down is in their marketing with the Company abandoning main stream media such as TV for social network engagement a strategy which Read admits is cheaper but less effective.
When Panasonic did invest in TV marketing with their now famous skipping advertisement for a waterproof Lumix camera sales soared with retailers such as JB Hi Fi and Harvey Norman reporting record sales. Consumers walked in asking for “the skipping camera” said a Harvey Norman executive.
The fact that Panasonic is struggling to get their brand message out is not surprising, arch rivals Samsung and Apple as well as Sony are constantly on the front pages of Australia’s mainstream media including TV and radio shows, Panasonic are still being relegated to specialist media and the product pages due to poor PR strategies.
At a recent Panasonic press launch at Luna Park for several new Panasonic products I was one a very small number of journalists who actually turned up.
In comparison arch rivals Samsung and LG attract mass media and TV when they do a product launch as was evident recently, with the launch of the new Samsung Galaxy S7, their new 2016 appliance range and with LG when they introduced their new TV range at Foxtel’s studio’s metres from Panasonic offices.
Media from all of the main national media were there including TV radio and specialist bloggers who have influence.
The Company recently switched PR Companies from Text 100 to Porter Novelli, in an effort to attract more exposure but this is still not delivering the brand clout that Panasonic deserves.
Very few people would know that Panasonic is a major global player in the battery market.
The Panasonic booth at last year’s Consumer Electronics Show in Las Vegas displayed a concept car from Tesla, the Japanese company’s partner in a major battery venture.
Among its recent initiatives, Panasonic is providing batteries for Tesla Motors joining the electric-car maker in building a big battery factory in the U.S., and has begun expanding to home batteries in Australia in partnership with energy suppliers to households and business.
Last year it bought Hussmann a U.S. maker of display cases and refrigeration systems for retailers—a business in which Panasonic has a major presence in Asia.
These are a lithium-ion battery with a cathode that is a combination of a lithium, nickel, cobalt, aluminium oxide. The battery industry calls this an “NCA battery” and they’ve been around—and made by Panasonic—for many years.
Tesla Motors CEO Elon Musk tweeted Saturday afternoon “253k as of 7am this morning,” meaning reservations for the Model 3 that was unveiled Thursday night after reservations for it opened around the world that morning including in Australia. It’s far more than expected and Musk said. “definitely going to need to rethink production planning.”
At $35,000 per car in the USA and $60,000 in Australia due to right hand drive modifications, that would amount to almost $4.7 billion in potential revenue when the Model 3 is actually delivered.
This means big revenues for Panasonic who is also working with energy resellers in Australia who are bundling Panasonic battery packs for sale to their customers.
Globally Panasonic are still trying to readjust to several years of losses, though they are doing better than most other Japanese Consumer Electronic Companies.
The abandoned revenue goal announced globally on Friday by Panasonic Corporation was for the fiscal year ending March 2019, coinciding with the company’s 100th anniversary.
When Mr. Tsuga took the top job in 2012, Panasonic was coming off a net loss of ¥772 billion today they are tipping profits ¥250 billion.
Mr. Tsuga has pledged to turn around the Osaka-based company by chopping off low-margin units and nurturing profitable business-to-business enterprises.
It was a clear shift in strategy for Panasonic, which had been battling stiff South Korean competition in the consumer-electronics market. The company scaled back its flagship television business and stopped selling several products, in Australia this led to job cuts.
Despite its challenges, Panasonic is on track for growth, analysts say. The key is replicating the sort of success enjoyed by its highly profitable U.S.-based Panasonic Avionics unit, which sells airlines in-flight entertainment systems and communication platforms connecting its cabin crews and ground crews, all new Qantas and Virgin aircraft use the new Panasonic system.
Panasonic is also exploring opportunities ranging from security cameras to advanced driver-assistance systems—perhaps too many areas, analysts say.
“Panasonic planted many seeds of business and that’s good, but it may want to start picking up few best ones to focus on,” said Akie Iriyama, an associate professor at Waseda Business School.
Though the consumer market may not be as profitable as the business market, Mr. Tsuga has been stressing its importance as a source of stable profitability. That contrasts with fellow electronics giant Toshiba which gave up most of its consumer-appliance businesses in trying to escape financial troubles.
Arch rival Sharp who was last week acquired by Taiwanese Company Foxconn is set to disappear from the Australian consumer market according to sources.
In Japan, Panasonic is a major provider of home appliances such as refrigerators, rice cookers and even hair dryers. Its TV unit is expected to turn a profit in the fiscal year ending Thursday—the first in eight years.