(MENAFN - AFP) Panasonic said Wednesday it would book a mammoth 9.6 billion net loss this fiscal year as the Japanese consumer electronics giant undergoes a major overhaul of its troubled business.
While it said it would achieve an operating profit, restructuring costs and writedowns would mean the whopping 765 billion yen shortfall and Panasonic warned regular dividend payments to shareholders would be temporarily shelved.
The projected loss is close to Panasonic's record 772.2 billion yen shortfall last fiscal year, one of the worst-ever for a Japanese firm, and a reversal of its earlier vow to return to the black by March next year.
Panasonic's sales in the six months to September tumbled amid slumping demand for its flat-panel TVs, digital cameras and mobile phones, although there was a uptick in sales of refrigerators and washing machines.
"The global economy continues to contract with much deep remaining uncertainty due to the European financial crisis and slowdown of the Asian economic expansion including China," Panasonic said in a statement.
"The electronics industry continued to be difficult with a downturn in digital products, especially flat-panel TVs, and a sales decline in electronic components," it added.
Despite the global headwinds, Panasonic, like rivals Sony and Sharp which report earnings this week, has suffered in its television business amid falling prices and stiff competition from overseas rivals. It also accumulated debt from the purchase of smaller rival Sanyo.
The television business has razor-thin profit margins with Japanese firms unable to keep pace with rivals such as South Korea's Samsung Electronics which has blown past Japan Inc. in the lucrative global smartphone market.
Samsung posted a record third-quarter profit of nearly 6.0 billion, powered by strong sales of its Galaxy smartphones and display panels.
Panasonic, which had earlier said it expected to post a net profit of 50 billion yen in the fiscal year to March 2013, also cut its annual sales forecast on Wednesday by 10 percent to 7.3 trillion yen.
Restructuring expenses alone in the current fiscal year would be about 440 billion yen, more than 10 times the firm's original forecast, it added.
Panasonic's first-half net less grew five-fold to 685.2 billion yen.
Last month Moody's cut its credit rating on Panasonic, citing the struggling firm's weak profitability and high debt.
The company has announced a major restructuring of its liquid crystal display manufacturing division, and is reportedly considering shifting all of its mobile phone handset production overseas because of high costs at home.
Reports have said it would abandon its European smartphone business over the next several months.
Meanwhile, Japan's Toshiba and Fujitsu also slashed their full-year profit forecasts on Wednesday.
TV and laptop computer maker Toshiba cut its net profit outlook to 110 billion yen from 135 billion yen for the year to March. IT and electronics giant Fujitsu said it lost 11.0 billion yen in the first half of the fiscal year and scaled back its sales and profit expectations.
Japan's electronics sector has been badly hit by the rise of the yen, which makes exporters' products less competitive overseas, while falling prices and slow demand at home have also eaten into profits.
The yen hit a record high around 75 on the dollar late last year and remains strong.
Competitors including Samsung and US-based Apple are offering ever-increasing competition, with high-resolution display technology a key battleground as demand intensifies for smartphones, tablet computers and other gadgets.
Japanese manufacturers were also hit hard by last year's quake-tsunami disasters, which paralysed operations and dampened consumer sentiment.