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1Copyright (C) 2010 Panasonic Corporation. All Rights Reserved.
Panasonic GroupNew Midterm Management Plan
May 7, 2010Panasonic Corporation
Fumio OhtsuboNotes: 1. This is an English translation from the original presentation in Japanese.
2. In this presentation, “fiscal 2010” or “FY 2010” refers to the yearended March 31, 2010. In addition, “fiscal 2011” or “FY 2011”refers to the year ending March 31, 2011.
This presentation outlines Panasonic’s new midterm management plan.
Today, I would like to present four main points:
1) Summary of GP3 Plan
2) New Midterm Management Plan
3) Midterm Strategy for Panasonic Group
4) Management Innovation that Supports Group Strategy
2Copyright (C) 2010 Panasonic Corporation. All Rights Reserved.
2
1. Summary of GP3 Plan
3. Midterm Strategy for Panasonic Group
4. Management Innovation that Supports Group Strategy
2. New Midterm Management Plan
ContentsContents
This section outlines the summary of GP3 plan.
3Copyright (C) 2010 Panasonic Corporation. All Rights Reserved.
3Summary of GP3 PlanSummary of GP3 Plan“Unprecedented simultaneous global recession”
triggered by financial crisis“Market structural change”: shifting to low-priced products,
expanding emerging market demands, and more environmentally conscious
Far below targets in sales and ROEAchieved target of CO2 emission reduction in production
◆Far below GP3 sales increase targets in all strategic businesses(A: Appliance Solutions, B: Black Box Devices, C: Car Electronics, D: Digital AV Networks)
◆Far below GP3 sales increase targets in all strategic businesses(A: Appliance Solutions, B: Black Box Devices, C: Car Electronics, D: Digital AV Networks)
Four strategicbusinesses
Four strategicbusinesses
Manufacturing-oriented
innovation
Manufacturing-oriented
innovation
◆Lowered break-even point and reduced fixed cost
◆Failed to create new large-scale businesses
◆Lowered break-even point and reduced fixed cost
◆Failed to create new large-scale businesses
◆Far below targets in GP3 Planvs.GP3: Sales overseas total :72% BRICs+V:73%
◆Far below targets in GP3 Planvs.GP3: Sales overseas total :72% BRICs+V:73%
Double-digit growthin overseas sales
(Consumer & systems sales)
Double-digit growthin overseas sales
(Consumer & systems sales)
Although the Company achieved the target of CO2 emission reduction in its production process, sales and ROE were far belowtargets under the big changes in the global market.
Due to thorough "Itakona" activities (cost optimization through the analysis of costs at raw material level) and the restructuring programs, the Company has improved management structure. However, from the viewpoint of growth and profitability, the Company missed its targets so much.
We could not respond quickly to those changing situations and not adjust ourselves speedy to bring reform; therefore, we will solve our structural problems drastically in order to survive waves of commoditization.
4Copyright (C) 2010 Panasonic Corporation. All Rights Reserved.
4ContentsContents
1. Summary of GP3 Plan
3. Midterm Strategy for Panasonic Group
4. Management Innovation that Supports Group Strategy
2. New Midterm Management Plan
This section outlines Goals for New Midterm Management Plan.
5Copyright (C) 2010 Panasonic Corporation. All Rights Reserved.
5Positioning of New Midterm Management PlanPositioning of New Midterm Management Plan
FYFY20112011
FYFY20132013
FY2019
GP3 PlanFY2010
Inte
grat
ing
envi
ronm
enta
l con
tribu
tion
and
busi
ness
gro
wth
No.1 Green Innovation Companyin Electronics Industry
Panasonic Group filled with significant growth potential
New Panasonic Group kicks off
Paradigm shift for growth
Lay foundation to bea Green Innovation Company
New Midterm Management Plan
We have become new Panasonic Group, adding SANYO as a subsidiary. Towards our vision to become the No.1 Green Innovation Company in the Electronics Industry, this midterm plan positions as the first step.
The Company is determined to implement two initiatives:
1) shifting its paradigm to grow, and 2) laying a foundation to be a Green Innovation Company, aiming contribution to the protection of environment and business growth.
We will become ‘Panasonic Group with significant growthpotential’ by the end of FY2013.
6Copyright (C) 2010 Panasonic Corporation. All Rights Reserved.
6Themes for New Midterm Management PlanThemes for New Midterm Management Plan
Existing businesses
New businesses: energy, etc
Individual product-oriented
Solutions & systems business oriented
Paradigm shift Paradigm shift for growthfor growth
Japan-oriented
Globally-oriented
Increase profitability based on growth
Enhance contribution to the environment
-Pursue global excellence-
Green Transformation Green Transformation 20122012(GT(GT1212))
Laying foundation Laying foundation to be Green Innovation Companyto be Green Innovation Company
-Lay groundwork to beNo.1 in green indexes-
These are two initiatives.
More specifically, to convert its paradigm for growth, the Company will shift its business;
1) from 'existing businesses' to 'new businesses - energy, etc'
2) from 'Japan-oriented' to ‘ globally-oriented'
3) from ‘individual product-oriented' to 'solutions & systems
business oriented'
We name our new midterm management plan “Green Transformation 2012 (GT12)” in which the Company aims to become the world’s No.1 Green Innovation Company in the Electronics Industry.
7Copyright (C) 2010 Panasonic Corporation. All Rights Reserved.
7GT12 Group Management GoalsGT12 Group Management Goals
50 million tonsCOCO22 emission emission reductionreduction
Compared to level of FY2006
10 trillion yen
5% or more
10%
800 billion yen or moreTotal for 3 years
SalesSales
Operating profit to Operating profit to sales ratiosales ratio
ROEROE
Free cash flowFree cash flow
‘GT12’ Group Management Goals in FY2013, the last fiscal year of GT12,are the following. ・Sales: 10 trillion yen・Operating profit to sales ratio: 5% or more・ROE: 10%・Free Cash Flow: 800 billion or more in total for 3 years・CO2 emission reduction: 50 million tons
We set the numbers of sales and ROE above our global excellence indexes.
We plan to reduce 50 million tons of CO2 emission from both production process and product usage, leading the electronics industry.
Achieving those indexes, Panasonic Group will be able to take a major step to exceed ‘global excellence indexes’ and ‘industry No.1 in green indexes’ as indexes for No.1 Green Innovation Company in the Electronics Industry.
8Copyright (C) 2010 Panasonic Corporation. All Rights Reserved.
8Transformation IndexesTransformation Indexes
OverseasOverseas
New New Business Business
FieldsFields
Solutions & Solutions & SystemsSystems
IndexesSales ratio of six key businessesSales of energy
systems business
FY2010
35%
540billion
FY2013FY2013
42%
FY2019(direction)
55%or more
Sales of systems & equipment business
Overseas sales ratio
(for systems & equipment)
2.2 trillion
33%
2.6 trillion
39%
3.5 trillion or more
50%or more
(Note) Figures for FY2010 include annual figures for SANYO.
Sales in emerging countries*
Overseas sales ratio
440 billion
48%
770billion
55%
-
60%or more
* Panasonic’s consumer and systems sales for BRICs+Vietnam・MINTS (Mexico, Indonesia, Nigeria, Turkey, Saudi Arabia) +the Balkans
3 trillion or more
850 billion
(yen)
This chart shows our transformation indexes, which we set to convert our paradigm for growth in “GT12”.
To be in new business fields, Panasonic aims to increase sales ratio of six key businesses to 42%. Regarding sales of energy systems business, the Company targets annual sales of 850 billion yen in FY2013.
To be globally-oriented, the Company plans to increase the overseas sales ratio from 48% to 55% led by expandingsales in emerging countries as a driving force.
To be solutions & systems oriented, the Company aims to expand sales of systems & equipment business to 2.6 trillion yen, focusing on overseas market, and increase overseas sales ratio to 39%.
These are transformation indexes which we will pursue towards FY2019.
9Copyright (C) 2010 Panasonic Corporation. All Rights Reserved.
9ContentsContents
1. Summary of GP3 Plan
3. Midterm Strategy for Panasonic Group
4. Management Innovation that Supports Group Strategy
2. New Midterm Management Plan
1) Accelerate growth with Six Key Businesses
2) Expand overseas businesses in emerging countries3) Strengthen solutions & systems businesses
4) Promote and Implement corroboration with SANYO
This section outlines midterm strategy for Panasonic Group.
First, I would like to explain our initiatives to accelerate ourgrowth with six key businesses.
10Copyright (C) 2010 Panasonic Corporation. All Rights Reserved.
10Panasonic’s Six Key BusinessesPanasonic’s Six Key Businesses
LEDLED
Solutions for Entire Home and Entire Building
HealthcareHealthcareSecuritySecurity
Network Network AVAV
Flat-panel TVsDigital cameras,Blu-ray recorders & players,Mobile AV, etc.
Energy SystemEnergy System
Energy creation (solar cells, fuel cells)Energy storage (rechargeable batteries)Energy management systems, etc.
Heating/RefrigerationHeating/Refrigeration/Air Conditioning/Air Conditioning
Air conditionersAir purifiersRefrigerator and freezer /showcases, etc.
This chart shows our six key businesses.
Energy system, Heating/Refrigeration/Air Conditioning and Network AV businesses are positioned as Group’s key businesses with the aim of increasing total Group’s sales and profit.
Although the business sizes of Healthcare, Security, and LED arestill small, the Company will grow them significantly as ‘pillars of the next-generation businesses'.
The Company pursues its possibilities to grow, offering solutions for the entire home and the entire building by focusing on these strategic businesses. In this way, the Company will strongly perform and differentiate from competitors.
11Copyright (C) 2010 Panasonic Corporation. All Rights Reserved.
11Sales TargetSales Target10 trillion
FY2010Sales
FY2013Sales
Other than 6 key
businesses
Heating/Refrigeration/Air Conditioning
Network AV
SecurityHealthcare
Energy Systems
LED
LEDLED Backlight Backlight TVTV
*Figures for FY2010 include annual figures for SANYO
*8.6 trillion
1.2 trillion Sales
Growth
1.2 trillion 1.2 trillion Sales Sales
GrowthGrowth
(yen)
Regarding the six key businesses, the Company plans to increase sales by 1.2 trillion yen which is more than 80% of total sales growth in FY2013.
12Copyright (C) 2010 Panasonic Corporation. All Rights Reserved.
12Shifting Resources to Growth BusinessesShifting Resources to Growth Businesses
67%67%
Head Office R&D(FY2011-2013 total)
Consolidated Sales(FY2010)
CAPEX(FY2011-2013 total)
54%54%
6 Key 6 Key BusinessesBusinesses3355%%
■CAPEX
50.0
200.0
FY2010(excluding SANYO)
FY2011 FY2012 FY2013
EnergySystem
NetworkAV
Six
Key
B
usin
esse
s
354.3
480.0
300.0 280.0
FY2011FY2011--20132013totaltotal
Network AV Network AV 220 billion yen220 billion yenEnergy System Energy System 300 billion yen300 billion yen
(yen: billions)
Group total 1.06 trillion yenGroup total 1.06 trillion yen
The Company will drastically shift its management resources to the growth businesses.
In six key businesses which comprised 35 % of the consolidated sales in FY2010, the Company will spend 54 % of its total CAPEX and 67% of its total head office R&D expense during three years of GT12.
Regarding CAPEX, the Company will decrease total cost of investment from FY2011, but increase its investment ratio of energy systems.
13Copyright (C) 2010 Panasonic Corporation. All Rights Reserved.
13
● Energy Management Systems(power distribution and control system)
● Energy Storage (rechargeable batteries, etc.)
● Energy Creation (solar cells, fuel cells)
FY2010 FY2013
(yen: billions)850.0
<Sales>
・Lithium-ion: Make ahead high capacity and strengthen cost competitiveness
・Integrate controls of electricity, temperature and information
● Products related to eco-cars
*540.0
EnergyCreation
EnergyStorage
Energy ManagementEco-Car
*Figures for FY2010 include annual figures for SANYO.
Annual Average Growth Rate16%
Energy Systems business as a flagship business of Panasonic Group
・Focus on batteries, thermal systems and power supply systems
・Utilize accumulated technologies in consumer electronics business for its greater use
Energy Systems BusinessEnergy Systems Business
・・Solar cellSolar cell::Strengthen group sales structureStrengthen group sales structure・・Fuel cell Fuel cell ::Strengthen cost competitiveness for Strengthen cost competitiveness for
its greater useits greater use
The Company aims at the large annual average growth rate of energy systems by 16%, establishing energy systems as a flag-ship.
We will target total sales of 850 billion yen for energy creation, energy storage, energy management systems, and products related to eco-cars in FY2013.
14Copyright (C) 2010 Panasonic Corporation. All Rights Reserved.
14Solar CellsSolar CellsEnergy system business 1
Targets FY2013: No.1 in Japan FY2016: TOP3 in the worldFY2013: No.1 in Japan FY2016: TOP3 in the world
FY2011 FY2012 FY2013
400 600
900
Accelerate development of next-generation solar cells
Utilize know-how and resources of Panasonic
Strengthen group sales structureJapan: fully utilize housing sales channelOverseas: develop systems business
<Global sales volume (megawatt) >
Utilize Amagasaki PDP plantin Japan
Launch Panasonic Brand HIT on July 1
(MW)(MW)
Regarding solar cells as a core business in energy creation in FY2013, the Company aims at 900 MW global sales volume, more than tripled what was in FY2010.First, Panasonic will launch Panasonic brand HIT on July 1 whichhas a top level of energy conversion efficiency.Second, the Company will strengthen group sales structure withconsumer electronics, electrical construction materials, and housing sales channels in Japan. In addition, the Company will develop systems business globally including energy storage and energy management systems.Third, the Company will develop next-generation solar cells, utilizing know-how and resources of Panasonic to pursue higher performance and lower cost. As a part of collaboration, we consider to utilize Amagasaki PDP plant in Japan.In order to survive increasingly intense competition, the Company will develop these initiatives ahead of its schedule.Furthermore, Panasonic will expand fuel cell business by strengthening thorough cost competitiveness, looking to the global market.
15Copyright (C) 2010 Panasonic Corporation. All Rights Reserved.
15Lithium-ion BatteryLithium-ion BatteryMaintain No.1 Global Market Share
<FY2013 Sales target: 500 billion yen>
Pursue synergies of the Group to overwhelm our competitors
◆Secure profit in consumer-use market by taking lead in high capacity batteries
◆Strengthen cost competitiveness by developing new materials◆Introduce new products into growing market, such as for home-use
storage batteries and batteries for eco-cars
“Integrating Business Strategies” &“Optimum Standardization of Our Strengths”
Collaboration on cell development
Collaboration onproduction lines
Energy system business 2
In the lithium-ion battery business, the combination of SANYO and Panasonic will maintain the world’s No.1 market share, targeting to achieve 500 billion yen sales in FY2013.
The Company will maximize synergies of the group to achieve the target. Panasonic’s Energy Company and SANYO will introduce an early collaboration on cell development and production lines, integrating business strategies and standardizing their strengths at optimum level.
Both companies vigorously push forward the following initiatives, integrating strengths of Panasonic Group.
1) Take a lead in high capacity batteries for consumer-use
2) Strengthen cost competitiveness by developing newmaterials
3) Introduce new products in growing market, such as for home-use storage batteries and batteries for eco-cars
16Copyright (C) 2010 Panasonic Corporation. All Rights Reserved.
16Energy ManagementEnergy ManagementEnergy system business 3
LV DC HV DC
Integrate controls of electricity, temperature,energy and information
Accelerate development of AC/DC hybrid power distribution system related products
AC
MWO Floorheating
FridgeACVentilation fan LEDlight
DC
AC
Develop Panasonic cross-domain products throughout all group companies
Offer value unique to Panasonicthrough our comprehensive capability to
‘Create’, ‘Store’, ‘Save’ + ‘Manage’ Energy
Energy management
Smart Energy Gateway
(SEG)
Sto
reS
tore
Cre
ate
Cre
ate
Save
Save
Regarding our energy management business, Panasonic have offered its unique value through its comprehensive capability: from devices and equipment for ‘energy creation’, ‘energy storage’ and ‘energy saving’, to optimally integrated energy management systems.
We improve our product quality and offer system and equipment products which integrate controls of electricity, temperature and information of products.
We will develop AC/DC hybrid power distribution system related products to reduce energy loss during conversion.
We have ‘Corporate Division for Promoting Energy Solutions Business’ inaugurated on April 1, which takes a leadership to develop cross-domain products.
17Copyright (C) 2010 Panasonic Corporation. All Rights Reserved.
17Heating/Refrigeration/Air ConditioningHeating/Refrigeration/Air Conditioning
● Make proposals for entire store
●Expand commercial-use products
・Expand line-up・Make inroads into China and Europe
・Strengthen eco products・Expand sales in Japan, Asia and China
Air conditioners/ Heat Pumps
●Accelerate global expansion of room air conditioners
FY2010 FY2013
670.0・Europe: develop equipment sales channels (No. of dealers: 350 ⇒ 540)
・Emerging countries: strengthen low-noise & energy-saving leader models
Air Conditioner
Industrial Air Conditioner
Others
Heat-Pump system
Dehumidifier/Humidifier/Air Purifier
*540.0
Refrigeration/air conditioning +α(energy, security, etc.)
(yen: billions)
<Sales>
Average Annual Growth Rate
7.4%
Refrigerators & freezers/showcases
Commercial-use freezers/Showcases
・Make proposals for total controls of air conditioning/ showcase + lightening to convenience storesand supermarkets
*Figures for FY2010 include annual figures for SANYO.
Regarding heating, refrigeration, air conditioning business, we will maximize our strength with SANYO, combining Panasonic’s consumer products and SANYO’s commercial-use products. This is a basic for our strategy.
In terms of room air conditioner, we will globally expand our business, especially developing equipment sales channels in Europe and affordable local leading models in emerging markets.
For commercial-use products, we will focus on our market for large-sized air conditioning, natural-refrigerant water heat-pump drying systems, commercial-use refrigerators & freezers and showcases.
Making proposals for ‘the Entire store’, we are approaching to convenience stores and supermarkets to expand our business with our best practices.
Therefore, in this business, we target its sales of 670 billion yen in FY2013, an annual average growth rate of 7.4%.
18Copyright (C) 2010 Panasonic Corporation. All Rights Reserved.
18Network AVNetwork AV
● Expand sales of digital cameras
● Strengthen product competitiveness of flat-panel TVs
・PDP: Make “3D = Panasonic”Significantly improve in energy saving performance
・LCD: Expand LED backlight TVs
・Become Top 3 maker in industry with LUMIX sales of 20 million units
FY2010 FY2013
Flat-panel
TV
DSC
BD
Others
2,150.0
*1,600.0
(yen: billions)<Sales>
Average Annual Growth Rate
+10%
FY2013FY2013 LEDTV ratioLEDTV ratio 60%60%
Make a key business with more than Make a key business with more than 10 % market share10 % market share
FY20FY201133 3DTV ratio3DTV ratio 70%70%
Capture new demand mainly Capture new demand mainly in emerging countriesin emerging countries
・Digital interchangeable lens system camera business:
・Compact camera business:
*Figures for FY2010 include annual figures for SANYO.
Flat-panel
TV
DSC
BD
Others
In the PDP TV business, we will further improve product quality to maximize our advantage for 3DTV and drastically lower power consumption.
In the meantime, we will introduce LED backlight TVs this year as a part of our LCD TV business and expand its sales with our top power saving LED in the industry.
We will also focus on development of organic light emitting display (OLED) as a favorite of next generation display.
In digital camera business, we plan to increase LUMIX sales of 20 million units per year to become a Top 3 maker in the industry.
Therefore, in this business, we target the sales of 2,150 billion yen in FY2013, an annual average growth rate of 10%.
19Copyright (C) 2010 Panasonic Corporation. All Rights Reserved.
19Flat-Panel TVFlat-Panel TVNetwork AV business
◆Shift finished products and module assembly to Asia
◆Halve number of parts (LCD 32HD)◆Actively adopt OEM / ODM◆Complete series of new investments in FY2011
Cost structure
◆Raise selling price by introducing 3D and LED and carry out intensive advertising investment in major counties
◆Increase number of products for high-volume segment<Emerging countries: Over 11 million units in FY2013>
Products / Marketing
Phase change to make business profitable
Our biggest challenge for network AV business is to improve profitability of flat-panel TV business, rather than to increase sales.
First of all, we have to significantly improve its cost structure by shifting its finished products and module assembly to Asian countries and halving the number of components.
Second, we reduce our investment (CAPEX) in this business from FY2012, and we will maximize payoff for the investment.
Third, we will raise our selling price by increasing its sales with our 3DTVs and LED backlight TVs to improve its profitability.
20Copyright (C) 2010 Panasonic Corporation. All Rights Reserved.
20Next-Generation Key BusinessesNext-Generation Key Businesses
● LED
● Security
● Healthcare・Unify business strategies with PEW and SANYO
- In-hospital work assistance (robot business, etc.)
- Home healthcare
- Early diagnosis / treatment
・Shift business:
Company name change:
from Panasonic Shikoku Electronics Co., Ltd. to Panasonic Healthcare Co., Ltd.
<Sales>
*Excluding LED backlight TVs
Lay the foundation for full-fledged growth
GT12
540 billion
FY2010 FY2013
LED*
Healthcare
Security
FY2016
1 trillion<target>(yen)
・Increase sales of LINK products・Build up engineering capability overseas・Promote alliances with large companies
・Expand global business・Strengthen cost competitiveness and
supply capability
As a part of next-generation key business, we will form our foundation of healthcare, security and LED businesses for future growth.
In the healthcare business, all our group companies unify their strategies focusing on in-hospital work assistance, home healthcare, and early diagnosis and treatment.
Also, Panasonic Shikoku Electronics Co., Ltd. will make a full-scale shift from all of visual, storage, and device businesses to healthcare business by changing the Company name to Panasonic Healthcare Co., Ltd. on October 1.
We will also strengthen our global business infrastructure of security and LED businesses. In this way, we will target our sales of 540 billion yen in FY2013 in these three businesses.
21Copyright (C) 2010 Panasonic Corporation. All Rights Reserved.
21ContentsContents
1. Summary of GP3 Plan
3. Midterm Strategy for Panasonic Group
4. Management Innovation that Supports Group Strategy
2. New Midterm Management Plan
1) Accelerate growth with Six Key Businesses
2) Expand overseas businesses in emerging countries3) Strengthen solutions & systems businesses
4) Promote and Implement corroboration with SANYO
I would like to give a explanation that we are expanding our overseas business especially in emerging countries.
22Copyright (C) 2010 Panasonic Corporation. All Rights Reserved.
22Expand Overseas BusinessExpand Overseas Business
363030Brazil
Russia
India48 Vietnam
30Mexico
Indonesia
Nigeria 1010SaudiArabia
BalkansChina
107Turkey
China and Asia1111
991212
55
35
*Figures FY2010⇒FY2013 sales increase
(Data source: Overseas Regional Management Divisions)
1. Significantly increase sales in emerging countriesSales increase by 330 billion yen* (average annual sales growth rate 20%)
2. Increase overseas sales ratio 48%(FY2010) ⇒ 55% (FY2013)
*BRICS+V・MINTS+BMINTS+B(Consumer / systems sales)
(yen: billions)
As a part of our ‘GT12’, we are shifting our business furthermore to be globally-oriented especially by large sales increase in emerging countries.
We target to increase 330 billion yen of consumer / systems sales in next three years in our 10 main emerging countries and 1 region of ‘BRICs+V’ and ‘MINTS+B.’
As a result, we plan to increase the ratio of overseas sales from 48% to 55% in FY2013.
23Copyright (C) 2010 Panasonic Corporation. All Rights Reserved.
23Product Planning for ConsumersProduct Planning for Consumers
India
Brazil VietnamChina
High-volume Market
Research Center
Lifestyle Research Center
Discover Vietnam Projectnew
new
China Lifestyle Research Center
Global Consumer Research Center(Lifestyle research hub)
Global Consumer Research CenterGlobal Consumer Research Center(Lifestyle research hub)(Lifestyle research hub)
To beestablished in FY2011
To beTo beestablished established in FY2011in FY2011
Business domains: Life research centers, lifestyle concept research centers, etc.
Strengthen Lifestyle Research Overseas
Share knowledge with each region and promote optimum standardization of methods used to understand customers
・・・
Expanding overseas business in emerging countries, we have developed our products for high-volume segment with our strong product planning for local consumers in our lifestyle research institutes around the world.
We have our new research centers in India and Brazil and also we will establish our Global Consumer Research Center in our head office, Japan to share knowledge and promote optimum standardization of all lifestyle research institutes.
We will further improve our lifestyle research and offer products for high-volume segments one after another with our innovative product planning and designing around the world to expand our business.
24Copyright (C) 2010 Panasonic Corporation. All Rights Reserved.
24Products for High-Volume SegmentProducts for High-Volume SegmentLCD TVs in India LCD TVs in India (Available in June, 2010)(Available in June, 2010)
Sales for high-volume segment: 1 trillion yen level in FY2013
32” LCD TV
Top power-saving and high-output speakers in industry
Simple TV pedestal
LifestylesLifestyles
Washing machines in China Washing machines in China (Released in March, 2010)(Released in March, 2010)
Water-saving WM
1st grade ranked for water-saving &2nd grade ranked for energy-saving
Electric billsGood soundWall-hanging
Electric billsGood soundWall-hanging
LifestylesLifestyles
Water-savingEnergy-savingWater-savingEnergy-saving
Eliminatenon-essentials
Eliminatenon-essentials
Focus onessentialsFocus onessentials
Eliminatenon-essentials
Eliminatenon-essentials
No manual operation function
Focus onessentialsFocus onessentials
Those are some examples of our products for high-volume segment.
In India, we have developed LCD TV based on our lifestyle research. We have focused what is essential for consumers and offer our LCD TV, equipped with our top power-saving and high-output speakers in the industry. Meanwhile, we have eliminated what is not essential for consumers and simplified its pedestal with only one backlight to make it more affordable for middle class consumers.
Therefore, we plan to increase our sales of products for high-volume segment to 1 trillion yen level in FY2013.
25Copyright (C) 2010 Panasonic Corporation. All Rights Reserved.
25Global Home Appliance BusinessGlobal Home Appliance Business
FY2016FY2013FY2010
Expand product range
Expand sales by strengthening local sites
Home appliance products*overseas sales +15%
(year-on-year)
Set up a manufacturing site in Brazil
Develop full-fledged business in Europe
Green materialsInvertersHeat pumps
Set up a manufacturing site in India
Regional partnership
Create new demand
Strengthen foundation in Japan, China and Asia
Focus on core environmental technologies
*Air conditioners, refrigerators,washing machines, microwave ovensvacuum cleaners, small kitchen appliances, etc.
We have also increased our global sales of home appliance business with our products for high-volume segment.
In Japan, China and Asian countries, we have restructured and improved our local manufacturing and sales sites to expand our business.
In Europe, we will start full-fledged business to develop more products speedily with outsourcing, such as OEM from local manufacturers.
Furthermore, in India and Brazil, we plan to establish our new manufacturing sites.
We will focus on strengthening core environmental technologies to expand our global home appliance business.
26Copyright (C) 2010 Panasonic Corporation. All Rights Reserved.
26ContentsContents
1. Summary of GP3 Plan
3. Midterm Strategy for Panasonic Group
4. Management Innovation that Supports Group Strategy
2. New Midterm Management Plan
1) Accelerate growth with Six Key Businesses
2) Expand overseas businesses in emerging countries3) Strengthen solutions & systems businesses4) Promote and Implement corroboration with SANYO
I would like to talk about our solutions and systems businesses. Converting our paradigm to be solutions- and systems-oriented is one of the key points of shifting business structure with the comprehensive strengths of all Panasonic Group.
27Copyright (C) 2010 Panasonic Corporation. All Rights Reserved.
27Systems & Equipment BusinessSystems & Equipment Business
<Overseas sales>
*Figures for FY2010 include annual figures for SANYO Electric.
Large overseas sales increase
FY2010 FY2013
Annual Average growth rate
+11%
*33%Overseas
ratio
*2.2 tri. yen
Systems & equipmentbusiness
2.6 tri. yen
39%
Sales*720 billion yen
1 trillion yen
Organization
Humanresources
Collaboration
Establish structurefor each country / region
(FY2010→2013)
We will focus on expanding our systems & equipment business overseas with an annual average growth rate of 11%, centering on China and northeast Asia.
We are developing our business by establishing our organization structure for each industry, recruiting local engineering staffs and collaborating with local SI companies in those countries and regions.
28Copyright (C) 2010 Panasonic Corporation. All Rights Reserved.
28Group-Wide CollaborationGroup-Wide CollaborationCarry out “Comprehensive Solutions Strategy” with Corporate Division
for Promoting Systems & Equipment Business playing key role
Corporate Division forPromoting Systems & Equipment business
・・・
6 key businesses
AVC SN PSECLC PES HA SANYO PEW Business domain companies
Energy systemsHeating/Refrigeration
/Air conditioning
SecurityHealthcare
Network AV
LED
Sales divisions by country / region
Hotel HousingTrans-
portation& airport
Medical RetailOffice &factoryEducation Develop & Provide
“Solutions Package” for 7 key industries
Establish comprehensivesolutions-type business model
Collaborate with Partners & SIerStrengthen global PF functions
Increase engineering capability
+
Make comprehensiveMake comprehensivesolutions possiblesolutions possible
To offer more comprehensive solutions to our customers, we will establish our business promotion structure to enable group-wide collaboration.
We started to develop our ‘Solutions Package’ targeting seven key industries led by our ‘Corporate Division for Promoting Systems & Equipment Business’.
In this way, we will furthermore establish a comprehensive solutions-type business model, from planning to maintenance, combining our six key businesses.
29Copyright (C) 2010 Panasonic Corporation. All Rights Reserved.
29‘Comprehensive Solutions for Entire Town’‘Comprehensive Solutions for Entire Town’
FUJISAWA Sustainable ‘Smart Town’ Concept
・Collaborate with Fujisawa city and developers・Make use of Panasonic’s former factory site (50 acres)
Establish new business model in ‘Fujisawa’ and make inroads into global market
‘Smart Town’concept Entire town Reduce
CO2 & wastesPeace of mind
& safetyEfficient
socialinfrastructure
Locally produce& consume
energy
Collaboration with local governments, developers
and business partners
Provide equipment /systems / solutions in a comprehensive manner
Providecommunity services
Participate in & contribute to town development
for entire house
for entire store
for entire medical facility
for entirepublic facility
HealthcareSecurity
Community grid
Elderly facilities
Condominiums
Commercialfacilities
Detachedhouse
Roads
Parks
(in Japan)(in Japan)
We will also apply our ‘Comprehensive Solutions’ business model to ‘smart town’ concept, reducing CO2 emission and promoting ‘local energy production and consumption in towns.’
As a part of this project, we have worked on ‘FUJISAWA Sustainable Smart Town’ Concept with Fujisawa city, at our former factory site of 50 acres in Fujisawa city, Kanagawa prefecture.
Combining various comprehensive solutions, we will establish a new business model in Fujisawa and make inroads to the global market in the future.
30Copyright (C) 2010 Panasonic Corporation. All Rights Reserved.
30ContentsContents
1. Summary of GP3 Plan
3. Midterm Strategy for Panasonic Group
4. Management Innovation that Supports Group Strategy
2. New Midterm Management Plan
1) Accelerate growth with Six Key Businesses
2) Expand overseas businesses in emerging countries3) Strengthen solutions & systems businesses
4) Promote and Implement corroboration with SANYO
Next, I would like to talk about our collaboration with SANYO.
31Copyright (C) 2010 Panasonic Corporation. All Rights Reserved.
31Synergies in FY2013Synergies in FY2013Cost reduction by
strengthening management structure
(central purchasing for procurement, etc.)
Business collaboration(sales increase, more
efficient development, etc)
Strategic Working Committee for Group Collaboration
(established as of April 1, 2010)
+38.0+80.0
or more +52.0
Sales decrease, etc. -10.0
<Operating profit basis>
(yen: billions)
Our estimated total synergies in FY2013 are more than 80 billion yen in operating profit basis, even including negative impact of 10 billion yen by sales decrease of duplicated business.
The breakdown of 80 billion yen is: 52 billion yen of business collaboration, such as sales increase by mutual use of sales channels and system solutions, and more efficient development; 38 billion yen of cost reduction by strengthening management structure, such as central purchasing for procurement and sharing infrastructure.
We have ‘Strategic Working Committee for Group Collaboration’ inaugurated as of April 1 to speed up synergy effect.
32Copyright (C) 2010 Panasonic Corporation. All Rights Reserved.
32Our CollaborationsOur Collaborations
■Unify business strategies- Launch collaboration products- Unify development & consolidate operating sites
No.1 Green Innovation Companyin the Electronics Industry
Unification of group visions
Share overseas warehouses & offices(started to share warehouse in Dubai in Apr. 2010,and will do in other areas.)
Procurement,IT, etc.
・・・
Make optimum price the Group standard and improve efficiency through consolidation
Central purchasing
Effect: 25 bil. yen
InfrastructureEffect:
13 bil. yen
Sharing infrastructure
Appliance business Cost reduction through centralization
(to be included underneath)(to be included underneath)
As a part of collaboration with SANYO, we unify our appliance businesses and launch our new collaboration products. Meanwhile, we will unify R&D and consolidate operating sites.
In FY2013, we expect to generate 25 billion yen by cost reduction through centralization and consolidation of procurement and 13 billion yen by sharing infrastructure and knowledge.
We also intend to unify our corporate group visions, and share our ‘eco ideas’ label.
33Copyright (C) 2010 Panasonic Corporation. All Rights Reserved.
33ContentsContents
1. Summary of GP3 Plan
3. Midterm Strategy for Panasonic Group
4. Management Innovation that Supports Group Strategy
2. New Midterm Management Plan
Finally, I will talk about our management innovation that supports group strategy.
34Copyright (C) 2010 Panasonic Corporation. All Rights Reserved.
34CO2 Emission ReductionCO2 Emission ReductionTargeting peaking-out by FY2019
FY2006(base year)
Normal without any
improvement (Estimated)
FY2013
*Products included here are only main finished products
Products
Production
Products
FY2019
Aiming to peak out
Products
SANYO plantin Kasai
Panasonic plant in Suminoe
・Photovoltaic power generation (1MW)
・Lithium ion battery system (1.5MWh)
ProductionEstablish ‘top-runner plants’
・Manage operations by coordinating production and power generation facilities (facilities-link)
Create and save energies
TV Airconditioning
Lightingbulbs
Solar cells
Production
CO2 Emissionsreduction
120 mil. tons(-50% of estimates)
Target
CO2 Emissionsreduction
50 mil. tons
(in Japan)(in Japan) (in Japan)(in Japan)
First, contribution to the protection of environment is one of the most important in our management innovation and our aim of all business activities.
We further reduce CO2 emission in all business domain companies by product usage, in addition to by production activities. Therefore, we target to reduce 50 million tons of CO2 emission in FY2013 compared to the estimated figures in FY2013 without any improvement from FY2006.
Expanding the size of contribution in reducing CO2, we intend to target our total CO2 emission peaked out byFY2019.
35Copyright (C) 2010 Panasonic Corporation. All Rights Reserved.
35Recycling-Oriented ManufacturingRecycling-Oriented Manufacturing<Future Goal>
Total resources used (A)
Productionactivities
Resources recycled at plants
(D)
Recycled materials
Waste disposal
Total recycled resources used (B)
<recycling>
Wastesat plants (C)
productsproducts
Recycledmaterials
Total resources used(A)
Total recycled resources used (B)
> 12%> 12%
Wastes produced at plants (C)
Resources recycled at plants (D)
≧≧ 99%99%
Make most of recycled resources usage
Pursue zero emissions at plants
Through company-wide collaboration, strengthen efforts from design stage
Develop 3R design & recycling technologies
<Targets in FY2013>
Pursue efforts to zero wastes from production activities
Maximize ratio of ‘Recycled resources to total resources used’
As a part of our environmental contribution, recycling-oriented manufacturing is also important.
We pursue efforts to zero wastes from production activities, minimizing usage of total resources and maximizing usage of recycled resources in 2018.
In ‘GT12’, we will make efforts from designing stage through company-wide collaboration, focusing on: 1) Making the most of recycled recourses
2) Pursuing zero emissions at plants
3) Developing 3R (Reuse/Reduce/Recycle) design and
recycling technologies.
36Copyright (C) 2010 Panasonic Corporation. All Rights Reserved.
36Create New BusinessesCreate New Businesses●● Domain companiesDomain companies
●● Head office (New largeHead office (New large--scalescaledd projects)projects)
Notes: All figures indicate cumulative amount for next 3 years.
Sales and CAPEX
・Sales 1.1 trillion yen・Capex 230 billion yen
Establishstructure
・AVC Networks Companyestablished New Business Promotion Office
・Home Appliances Companycarry out New Business ProjectFY2011 FY2012 FY2013
180.0350.0
600.0
Sales in new business(yen: billions)
Establishstructure
Strategic investment
・Established “Innovation Promotion Center” as of April 1
・・Strategically use budget for head officeStrategically use budget for head office(77 billion yen or more)(77 billion yen or more)
(projects better to be managed by head office than single business domain company)
We also enhance our capability to create new businesses for the future.
Led by our domain companies, we target to have 1.1 trillion yen sales of new business cumulatively in next three years, with 230 billion yen of investments. Most of our domain companies establish new offices to promote this project.
Meanwhile, our head office will focus on large-scaled projects with more than 77 billion yen of strategic investments for the next three years. We have ‘Innovation Promotion Center’ in our corporate R&D group inaugurated as of April 1 which will take leadership in those projects.
37Copyright (C) 2010 Panasonic Corporation. All Rights Reserved.
37Cash Flow-Oriented ManagementCash Flow-Oriented Management●● Carry out business portfolio strategyCarry out business portfolio strategy
●● Improve cash flow generation capabilityImprove cash flow generation capabilityMidterm Enhanced
Cash Flow Management Project
Centralize procurement,strengthen design value engineering
Internalize cost management
process
Management of large-scaled investments
theoretical inventory applied throughout all group companies
Apply to all productsCost reduction ofmore than 1.5 trillion yen
Shift resources to growth areas by selling or Shift resources to growth areas by selling or closing down businessesclosing down businesses
Businesses to Businesses to be withdrawnbe withdrawn
Businesses to supportBusinesses to supportnextnext--generationgeneration Invest & develop for futureInvest & develop for future
Revitalize by renovating and shifting strategiesRevitalize by renovating and shifting strategiesBusinesses to beBusinesses to berevitalizedrevitalized
Key businessesKey businesses Drive growth for GroupDrive growth for Group
Regarding to our cash flow-oriented management, we carry out business portfolio strategy dividing our business into four categories shown above, to make our best investment decision leveraging growth capability and profitability.
We will also improve cash flow generation capability at operating sites in our ‘Midterm Enhanced Cash Flow Management Project’. We will maximize investment return by increasing monitoring efforts of large-scaled investments, and improve working capital by developing our theoretical inventories applied throughout all group companies.
We will take all appropriate steps to increase profitability, generating cash flow.
38Copyright (C) 2010 Panasonic Corporation. All Rights Reserved.
38Net Cash and Cash FlowNet Cash and Cash Flow
(yen: billions)
● FCF more than 800 billion yen cumulative in next 3 years
● ‘Midterm Enhanced Cash Flow Management Project’ in all group companies
Net cash +600 billion yen or moreEnd of Mar. 2010
(FY10)(actual)
End of Mar. 2013 (FY13)
(estimates)
NetIncome
NetCAPEX
Working Capital, etc. Dividends,
etc.
▲119.3
-500
500.0
Net Cash
Net Cash
-
500 -
1,000 -
-500-
500-
1,000-
FCF +800 billion yen or more
With our efforts, we will have strong financial position as the same level as we used to have in the past, by generating more than 800 billion yen of FCF cumulatively in the next three years and making our net cash position positive as early as possible.
39Copyright (C) 2010 Panasonic Corporation. All Rights Reserved.
39FY2011 Forecast & GT12FY2011 Forecast & GT12
-3.7%-3.7% 10%10%ROEROE
Operating profit ratio
2.6%
FY2011 FY2013
SalesSales7.47.4
More than 5.0%
2.8%
10.010.08.88.8
FY2010
1.8%1.8%
(yen: trillions)(yen: trillions)
Our targets in FY11 are shown above. Achieving those targets in FY11, we will accelerate our progress toward our target in FY13, a final year of ‘GT12’.
40Copyright (C) 2010 Panasonic Corporation. All Rights Reserved.
40
In our new midterm management plan, ‘GT12’, Panasonic, with all group companies, will drastically shift our paradigm for growth and lay the foundation to be a Green Innovation Company.
Thank you for your continuous support.
41Copyright (C) 2010 Panasonic Corporation. All Rights Reserved.
41Disclaimer Regarding Forward-Looking Statements
This presentation includes forward-looking statements (within the meaning of Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934) about Panasonic and its Group companies (the Panasonic Group). To the extent that statements in this presentation do not relate to historical or current facts, they constitute forward-looking statements. These forward-looking statements are based on the current assumptions and beliefs of the Panasonic Group in light of the information currently available to it, and involve known and unknown risks, uncertainties and other factors. Such risks, uncertainties and other factors may cause the Panasonic Group's actual results, performance, achievements or financial position to be materially different from any future results, performance, achievements or financial position expressed or implied by these forward-looking statements. Panasonic undertakes no obligation to publicly update any forward-looking statements after the date of this presentation. Investors are advised to consult any further disclosures by Panasonic in its subsequent filings with the U.S. Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934 and its other filings.
The risks, uncertainties and other factors referred to above include, but are not limited to, economic conditions, particularly consumer spending and corporate capital expenditures in the United States, Europe, Japan, China, Asia and other countries; volatility in demand for electronic equipment and components from business and industrial customers, as well as consumers in many product and geographical markets; currency rate fluctuations, notably between the yen, the U.S. dollar, the euro, the Chinese yuan, Asian currencies and other currencies in which the Panasonic Group operates businesses, or in which assets andliabilities of the Panasonic Group are denominated; the possibility of the Panasonic Group incurring additional costs of raisingfunds, because of changes in the fund raising environment; the ability of the Panasonic Group to respond to rapid technological changes and changing consumer preferences with timely and cost-effective introductions of new products in markets that are highly competitive in terms of both price and technology; the possibility of not achieving expected results on the alliances or mergers and acquisitions including the acquisition of SANYO Electric Co., Ltd.; the ability of the Panasonic Group to achieve its business objectives through joint ventures and other collaborative agreements with other companies; the ability of the PanasonicGroup to maintain competitive strength in many product and geographical areas; the possibility of incurring expenses resulting from any defects in products or services of the Panasonic Group; the possibility that the Panasonic Group may face intellectual property infringement claims by third parties; current and potential, direct and indirect restrictions imposed by other countries over trade, manufacturing, labor and operations; fluctuations in market prices of securities and other assets in which the Panasonic Group has holdings or changes in valuation of long-lived assets, including property, plant and equipment and goodwill, deferred tax assets and uncertain tax positions; future changes or revisions to accounting policies or accounting rules; as well as natural disasters including earthquakes, prevalence of infectious diseases throughout the world and other events that may negatively impact business activities of the Panasonic Group. The factors listed above are not all-inclusive and further information is contained in Panasonic’s latest annual report on Form 20-F, which is on file with the U.S. Securities and Exchange Commission.
In order to be consistent with generally accepted financial reporting practices in Japan, operating profit (loss) is presented in accordance with generally accepted accounting principles in Japan. The company believes that this is useful to investors in comparing the company's financial results with those of other Japanese companies. Under United States generally accepted accounting principles, expenses associated with the implementation of early retirement programs at certain domestic and overseas companies, and impairment losses on long-lived assets are usually included as part of operating profit (loss) in the statement of income.
42Copyright (C) 2010 Panasonic Corporation. All Rights Reserved.
42
1.2 trillion yen increase1.2 trillion yen increase
Overseas Sales Ratio to 55%Overseas Sales Ratio to 55%
Environmental contribution: reduction inCO2, recycling-oriented manufacturingStrengthen capability to create new businessAccelerate global human resources developmentCash flow-oriented management
Sales 10 trillion yen
Operating profit ratio5% or more ROE 10%
FCF 800 billion yen or more (3yr. total)
Reduce 50 million ton CO2 emission
Managementgoals
Groupmidterm
managementstrategy
Managementinnovation to
supportstrategy
Build up Group 6 key businesses
Expand overseas business in emerging countries
Strengthen solutions & systems business
Promote and implement collaboration with SANYO
・Drive growth: Energy Systems, Heating/Refrigeration/Air Conditioning, Network AV・Build pillars for next generation: Healthcare/Security/LED・Focus allocation of resources / strengthen business through collaboration with SANYO
・Address high-volume segment through manufacturing to meet customers’ needs・Globally expand appliance business
・Largely increase in sales for systems & equipment businesses overseas・’comprehensive solutions’ through combined all Groups’ efforts
Speed up initiatives throughCorporate Division for
Group Management Innovation
Green Transformation 2012 (GT12)-“Paradigm shift toward growth” & “building foundation of Green Innovation Company”-Green Transformation 2012 (GT12)--““Paradigm shift toward growthParadigm shift toward growth”” & & ““building foundation of Green Innovation Companybuilding foundation of Green Innovation Company””--
<Supplement 1>
Systems & Equipment Systems & Equipment 2.6 trillion yen2.6 trillion yen
Synergy 80 billion yen Synergy 80 billion yen or moreor more
43Copyright (C) 2010 Panasonic Corporation. All Rights Reserved.
<Supplement 2>Group Six Key Businesses & Main ProductsGroup Six Key Businesses & Main Products
Other
・LED lighting equipment
・Fire alarm for house・Disaster & crimeprevention system
etc.
・Massaging chair・Blood pressure manometer
etc.
・Power distribution/Wiring/Controller
PEW andPanaHome
・LED bulbetc.
・Air conditioner・Heat pump water heating systems・Ventilating fan・Dehumidifier/humidifier/air purifier etc.
・Fuel cell・Compressor for eco-car
etc.
Home Appliances
・Security camera・Network camera・Door intercom system
etc.
Security
・LED device
・LED backlight TV
LED
・Bio & dispensingrelated equipment・Electronic health record system
etc.
・Blood glucosesensor・Ultrasonograph・Hearing aid
etc.
Healthcare
・DSC/camcorderetc.
・Industrial air conditioning・Refrigerator and Freezer/showcase
etc.
・ Lithium-ion battery
・Solar cell・Rechargeable battery for eco-car etc.
SANYO
・Lithium-ion battery・Capacitor for eco-car etc.
Components and Devices
・PDP/TV・LCD/TV・DSC・BD player/recorder
・Mobile phone・PND etc.
・Power supply ECU system for eco-car・Inverter for eco-car
etc.
Digital AVCNetworks
Network AVHeating/
Refrigeration/ACEnergy Systems
* Segments in which business domain companies in charge of 6 Key Businesses are classified
Segm
ent *