TOKYO - Japan’s Panasonic Corp lifted its outlook for earnings this year after reporting a 23 percent jump in third-quarter operating profit on healthy sales of car components and factory automation equipment.
The strong showing underscores the company’s shift away from the price competition of smartphones and other lower-margin consumer products, reinventing itself as a provider of automotive batteries, other car components and automation equipment.
Panasonic, the exclusive battery cell supplier for Tesla Inc’s mass-market Model 3 sedan, raised its profit forecast for the year ending March to 350 billion yen from 335 billion yen, in line with market estimates.
For the quarter just ended, operating profit surged to $1.09 billion (R12 trillion), beating an average estimate of 105.7 billion yen.
A streak of solid results at Panasonic have been driven mainly by the strength of its automotive unit - a business the firm is trying to strengthen by expanding battery production capacity globally to meet an anticipated surge in electric vehicle demand.
It started mass production of battery cells at Tesla’s Gigafactory in Nevada earlier last year and started mass production at a new plant in Dalian, China in December. It is also adding new production lines in Japan.
But analysts caution the Gigafactory makes Panasonic susceptible to any change in strategy at the US electric vehicle maker.
Last month, Tesla delayed a production target for the Model 3 sedan for a second time and said it would likely build about 2,500 Model 3s per week by the end of the first quarter, half the number it had earlier promised.
Aiming to reduce its dependence on Tesla, Panasonic recently partnered with Toyota Motor Corp to develop and supply batteries for electric vehicles.
Panasonic also took control of Spanish auto parts maker Ficosa International SA last year, a deal that has helped lift the Japanese firm’s earnings.