Panasonic Corporation Business Report FY ended Mar. 2017

Financial Overview

(US GAAP, in millions of JPY)
FY ended Mar. 31, 2017 FY ended Mar. 31, 2016 Rate of change
Sales 7,373,707 7,626,306 (3.7) -
Operating income 276,784 230,299 20.2 -
Income before income taxes 275,066 227,529 20.9 -
Current net income attributable to the Company's stockholders 149,360 165,212 (9.6) -
Automotive & Industrial Systems
Sales 2,417,907 2,539,526 (4.8) 1)
Operating income 109,296 50,224 117.6 2)

1) Automotive & Industrial Systems Sales:
-Due to robust sales of new vehicles worldwide, sales of electrical products at the automotive business increased, such as onboard cameras, sensors, switches, etc. Nevertheless, final sales results were impacted by the effect or negative currency translation. Even though sales of information systems such as car-navigation systems were lower in Europe, they were robust in Japan and China. Sales in the energy business were higher, thanks to robust sales of lithium-ion batteries in the USA for electric vehicles.

2) Automotive & Industrial Systems Operating Income:
-Even though operating-income results were affected by negative currency translation, operating income increased JPY 59.1 billion year-over-year. This was because of increased sales of automotive and industrial products, especially due to increases in the industrial sector.

Business Policy

Expanding Lithium-ion Battery Business
-Panasonic Automotive & Industrial Systems Company (AIS) unveiled a plan to expand its automotive lithium-ion battery (LiB) business. The company aims to increase LiB sales from JPY 180 billion in fiscal year 2015 (ended March 2016) to JPY 400 billion level in FY 2018. To achieve this, Panasonic AIS will enhance its development and manufacturing function. The company will practically apply LiBs with 1.5 times more power density than current products for hybrid vehicles in 2019, and LiBs with double energy density for plug-in hybrids and electric vehicles. As of March 2015 Panasonic AIS supplied LiBs for 40 models, received orders for 9 models, and was negotiating with carmakers about the introduction of its LiBs for 14 models. As of June 2016, these numbers have increased to 45 models, 19 models, and 22 models, respectively. (From an article in the Nikkan Jidosha Shimbun on July 9, 2016)

Automotive Business Positioned as Focal Point of Operations
-The Company will place a particular focus on its automotive systems business with high great potential. At the presentation meeting held in Tokyo on March 31, the Company said it had abandoned the Group's JPY 10 trillion sales target that was planned to be achieved by FY 2018. Sales target at its automotive division was revised to JPY 2 trillion, down JPY 100 billion from the original goal. The Company intends to make upfront investments next-generation cockpit technologies and advanced driving assistance systems (ADAS), which are expected to become its major profit-making products. It will also strengthen its partnership with Ficosa International, S.A. of Spain for expanding its advanced cockpit business. Its development and production resources will be focused on ADAS and automotive batteries. Panasonic's president Kazuhiro Tsuga said that divestiture of business is one of the various options for improving profitability, citing sellout of its lead-acid storage battery business to GS Yuasa Corporation as a decision it made for pursuing future expansion opportunities. (From an article in the Nikkan Jidosha Shimbun on April 4, 2016)

Ficosa International Becomes Consolidated Subsidiary

-The Company announced that it will increase its stake in Ficosa International, S.A. (Ficosa International), a Spanish automotive parts supplier. Panasonic currently has a 49% stake in Ficosa International, and will acquire an additional 20% stake. Since the start of a business and capital alliance between the two companies in June 2015, they have achieved results like intake of orders for electronic mirrors and other jointly developed products. After Ficosa International becomes a consolidated subsidiary of Panasonic, the two companies will strengthen cooperation and intensify their efforts for business expansion in high growth areas like next-generation cockpits and advanced driver assistance systems. (From an article in the Nikkan Jidosha Shimbun on March 22, 2017)

-The Company announced that it has signed a contract to acquire all shares of TeraDiode, Inc. (TDI), a laser supplier of high brightness direct diode lasers for industrial use, on January 2nd, 2017. TDI develops, manufactures and sells industrial lasers. Capitalized at USD 51.8 million and founded in August, 2009. High-precision and high-quality laser processing technology has become increasingly important to meet the demand in the automobile and other industries. TDI's high brightness DDL with its proprietary wavelength beam combining technology has attracted attention as a next generation laser that realizes such demand from a wide range of industrial markets. (From a press release on January 6, 2017)

-The Company announced on August 9 that it has acquired OpenSynergy GmbH (OpenSynergy), a company that is engaged in development of embedded automotive software. In anticipation of the advancement of autonomous driving technology, Panasonic aims to combine both companies' technologies and develop a next-generation cockpit system by around 2020. Panasonic acquired all the shares of OpenSynergy from the founder of OpenSynergy, a venture capital firm, and other shareholders. A current cockpit system is comprised of two different systems that independently provide multimedia functions like navigation and audio and driver support functions like signals on head-up display. OpenSynergy's "hypervisor" software technologies enable multiple operating systems to be integrated into one system. This makes it possible to realize one cockpit system where multimedia and driver support functions are integrated, which helps the driver to more intuitively receive information about pedestrians and road conditions detected through sensors, along with other useful data. (From an article in the Nikkan Jidosha Shimbun on August 12, 2016)

Partnership Formed with Colorado Department of Transportation

-The Company announced that it is partnering with the Colorado Department of Transportation (CDOT) to build a connected transportation program in which real-time data would be shared across vehicles, infrastructure and people to improve road safety. For the first time, Panasonic will apply its integrated automotive and traffic management technologies to a connected transportation program in the United States and Colorado. Working with its CDOT and other partners, Panasonic will focus first on connecting cars and the transportation system on the I-70 mountain corridor, one of the nation's most challenging corridors, as part of the state's RoadX program. RoadX is Colorado's vision to being a national leader in partnerships and the use of innovative technology for safe, delay-free travel in Colorado. Panasonic Corporation of North America is based in Newark, New Jersey. (From a press release on October 27, 2016)

Two Subsidiaries Are Merged

-The Company has decided to merge its two wholly-owned subsidiaries, Panasonic Industrial Devices Obihiro Co., Ltd. (PID Obihiro) and Panasonic Industrial Devices Taiko Co., Ltd. (PID Taiko), as of April 1, 2017. PID Obihiro, a manufacturer of automotive and electric vehicle relays, will be the surviving company, while PID Taiko, a manufacturer of automotive relays, will be merged into PID Obihiro. After the merger, PID Obihiro will change its name to Panasonic Switching Technologies Co., Ltd. and PID Taiko will continue its operation as a new company’s production base in Ohtawara, Tochigi Prefecture. By integrating management resources of the two companies, Panasonic aims to boost its EV relay development capabilities and management efficiency of automotive relay business. (From a press release on November 18, 2016)

GS Yuasa Corporation Turns Panasonic Storage Battery into Consolidated Subsidiary

-GS Yuasa Corporation announced that it has completed the acquisition of an 85.1% stake in Panasonic Storage Battery Co., Ltd., which manufactures and sells lead-acid batteries. As a result of this transaction, Panasonic Storage Battery became a consolidated subsidiary of GS Yuasa and changed its corporate name to GS Yuasa Energy Co., Ltd. Panasonic retains the remaining 14.9% in GS Yuasa Energy. (From a press release on October 3, 2016)


-The Company announced that its HIT (Heterojunction with Intrinsic Thin-layer) photovoltaic modules for automobiles have been adopted for the new Toyota Prius plug-in hybrid vehicle (PHV). Panasonic also supplies its automotive prismatic lithium-ion batteries for the new PHV's drive batteries. Panasonic's photovoltaic modules were installed as an option in the previous Prius PHV, but their functions were limited to areas such as the auxiliary charging of 12 V batteries and ventilation power sources for parked cars. The new HIT photovoltaic modules achieve an output of approximately 180 W, three times more than the current output, and can be used for drive battery charging in addition to auxiliary charging. The HIT photovoltaic modules are expected to extend the vehicle's driving range in electric mode and improve fuel economy. (From an article in the Nikkan Jidosha Shimbun on March 15, 2017)

-The Company announced that the Fender Premium Audio System, a collaboration between Fender Musical Instruments Corporation and Panasonic Automotive Systems Company of America, will be a featured option in the all-new 2018 Volkswagen Atlas SUV. It will be the most advanced Fender Premium Audio System to date – featuring 12 speakers and 480 watts of amplifier power. (From a press release on October 27, 2016)

-Ficosa International, S.A. and the Company have signed the first contract of a co-developed product. Both companies will produce an interior rearview mirror for a major European manufacturer (OEM), which will incorporate an electronic toll function that allows the automatic payment of motorway tolls without having to stop the vehicle. The project, which will last for seven years, is valued at EUR 50 million and will be produced in the plant of Ficosa in Viladecavalls (Barcelona). For this project, Panasonic has developed the credit card reading module while Ficosa has been in charge of the electronic management of the entire system. (From a press release on September 28, 2016)

Outlook for FY ending Mar. 31, 2018

(IFRS, in million of JPY)
FY ending Mar. 31, 2018
Sales 7,800,000
Operating income 335,000
Income before income taxes 325,000
Net income attributable to owners of parent 160,000

>>>Financial Forecast for the Next Fiscal Year (Sales, Operating Income etc.)

R&D Expenditure

(in millions of JPY)
FY ended Mar. 31, 2017 FY ended Mar. 31, 2016 FY ended Mar. 31, 2015
Overall 436,100 449,800 457,300
-Automotive & Industrial Systems 189,600 189,500 181,200

R&D Activity

-To research and develop infotainment equipments for automobiles, electronic parts such as secondary batteries, and electronic materials.

Developing Autonomous-driving Technology and Motorized Prototype
-The Company developed proprietary, motorized systems, in which electric circuits, invertors, motors, and other devices are integrated into a single housing. In line with this, the Company made use of its wealth of expertise in technology developed over the years for electric appliances, audio-visual systems, image-recognition systems, and artificial intelligence, working to achieve autonomous driving. The Company developed a motorized autonomous-driving prototype that enables the vehicle to recognize road conditions on its own, avoid vehicles stopped ahead, and travel autonomously on assigned routes. The Company has since launched test drives on its proving track within its own premises, which closely resembles the environment of actual public roads.

Product Development

Developed Secondary Mounting Underfill Material
-The Company announced that it has commercialized a secondary mounting underfill material that cures at low temperatures. Mass production is scheduled to begin in February 2017. The material is liquid resin, and when applied around components embedded in circuit boards, it penetrates between the circuit boards and components, considerably reinforcing mounting reliability. The underfill material is expected to be used for mount reinforcement of semiconductor packages and electronic parts mainly for automotive camera modules, communication modules (millimeter-wave radar modules), and ECUs. (From a press release on February 3, 2017)

Developed Cloud-based Solutions
-Panasonic Automotive Systems Company of America today announced the introduction of the Panasonic Cognitive Infotainment platform designed to provide OEMs and fleet providers a set of cognitive vehicle solutions combining Panasonic’s market leading infotainment expertise with IBM’s Watson and cloud technologies. The platform leverages Watson cognitive capabilities, including deep natural language processing and understanding, to answer questions and provide recommendations as well as directions while en route. The platform also introduces e-commerce capabilities for convenient in-vehicle purchases to make the most of a driver’s time, as well as possible future cognitive driving solutions that monitor the vehicle condition for safer driving. At CES 2017, Panasonic Automotive will demonstrate how the Panasonic Cognitive Infotainment conducts an e-Commerce transaction with a quick service restaurant. (From a press release on January 4, 2017)

Developed HL Series Radial Double Layer Capacitor
-Automotive & Industrial Systems Company (Kadoma-City, Osaka), an in-house company of Panasonic Corporation, announced that it has commercialized its "HL series radial lead type electric double layer capacitor" with the industry's first 2,000-hour operation guarantee. The new capacitor is expected to be used in backup power supply circuits for automotive systems that require long-life operations and miniaturization, like emergency brakes and door lock release systems. Mass production will start in January 2017. The company reduced the deterioration of characteristics such as capacitance reduction and internal resistance increase by using a newly developed proprietary electrolyte, and realized the 2,000-hour operation guarantee. Power supply circuits can be designed to use fewer capacitors at the time of the initial design. (From an article in the Nikkan Jidosha Shimbun on December 26, 2016)

Developed LCD with 1,000,000:1 Contrast
-The Company announced that it has developed a new liquid crystal panel that achieves a contrast ratio of over 1,000,000:1, which is 600 times that of conventional liquid crystal panels. The new liquid crystal panel can display dark objects darker and bright objects brighter. This technology will contribute to improvements in the visibility and design flexibility of automotive monitors. Panasonic will start sample shipment in January 2017 and mass production in the fall of 2017. The new product is a seventh generation liquid crystal panel that was developed by Panasonic Liquid Crystal Display Co., Ltd., a subsidiary of Panasonic. The new liquid crystal panel adopts a hybrid cell structure that combines two liquid crystal materials with different light-transmission properties for display and light modulation. The new technology allows independent control of the display and light-modulating cells. (From an article in the Nikkan Jidosha Shimbun on November 29, 2016)

Developed Conductive Polymer Hybrid Aluminum Electrolytic Capacitor
-The Company's Automotive & Industrial Systems Company announced that it has developed a large current power choke coil and a conductive polymer hybrid aluminum electrolytic capacitor for automotive use. These miniaturized components contribute to downsizing of power circuits and instantaneous large current supply. Mass production of the new coil will begin in June and that of the new capacitor will start in September 2016. The company offers a free on-line simulation system on its website that allows simulation of noise attenuation for a filter using these coils and capacitors. This system is the first of its kind in the industry. The company expects the new coil will generate sales of JPY 100 million in 2016 and JPY 1 to 2 billion in 2018. It anticipates sales of JPY 2 billion from the new capacitors in 2018. (From an article in the Nikkan Jidosha Shimbun on June 1, 2016)

Developed LED Module
-The Company announced that it has developed two types of connectors for connecting in-vehicle LED lamp modules to control boards. These connectors allow for greater freedom and refinement in designing in-vehicle LED lighting. One of these is "Board to FPC (Flexible printed circuit) Connector" that is suitable for cable connection to daytime running lights (DRLs) and to rear lamps. The other is "Board to Wire Connector", which will be used for LED headlamp modules. Samples of these products will be available in June 2016. (From a press release on May 27, 2016)

Developed Light Diffusing Polypropylene Molding Compounds
-The Company announced that it has developed a light diffusion type polypropylene (PP) resin molding compounds, called "Full Bright" PP, which can extend the operating life of LEDs. Mass-production of this new material, which is lightweight and provides higher brightness of LED lighting, will begin in April 2016. The industry's first introduction of a material applicable for injection stretch blow molding enables the formation of complex shapes and contributes to greater product design freedom for customers. (From a press release on April 5, 2016)

Capital Expenditure

(in millions of JPY)
FY ended Mar. 31, 2017 FY ended Mar. 31, 2016 FY ended Mar. 31, 2015
Overall 311,600 248,800 226,700
-Automotive & Industrial Systems 195,000 116,300 107,700

-For FY ended March 2017, major investment items of Automotive & Industrial Systems are:

  • Expanding production of secondary batteries
  • Producing some new on-board vehicle products, infotainment and electronic components, and expanding their production volumes

Planned Capital Investment

(As of Mar. 31, 2017)

Planned investment amount
(in millions of JPY)
Main purpose
Overall 345,000 -
-Automotive & Industrial Systems 185,000 -Expanding production of secondary batteries
-Producing some new on-board vehicle products, infotainment and electronic components, and expanding their production volumes

Investments outside Japan

-Tesla and the Company announced on January 4 that mass production of lithium-ion battery cells has started.
The cylindrical “2170 cell” that is being produced was jointly designed and engineered by Tesla and Panasonic to offer the best performance at the lowest production cost for both electric vehicles and energy products.
The 2170 cells will initially be used in Tesla’s Powerwall 2 and Powerpack 2 energy products.
Model 3 cell production will follow in the second quarter.
By 2018, the Gigafactory will produce 35 GWh/year of lithium-ion battery cells, half of the entire world’s battery production.
The Gigafactory is being built in phases so that Tesla, Panasonic, and other partners can begin manufacturing immediately inside the finished sections and continue to expand thereafter.
Once complete, the Gigafactory will have the largest footprint of any building in the world.
In 2017, Tesla and Panasonic will hire several thousand employees and at peak production, the Gigafactory will directly employ 6,500 people.
(Tesla press release from January 4, 2017)

-The Company announced on December 27 that Tesla and Panasonic have finalized an agreement this week to begin the manufacturing of photovoltaic (PV) cells and modules at the Buffalo, NY factory.
Production of the first PV modules will begin in summer 2017, and will ramp to 1 Gigawatt of module production by 2019.
As Tesla and Panasonic begin production, Buffalo will continue to expand Tesla's American manufacturing base and create thousands of new jobs in the coming years.
Tesla reaffirms SolarCity's commitment to create over 1,400 jobs in Buffalo-including more than 500 manufacturing jobs.
Panasonic, with its technological and manufacturing expertise in PV production, will also work with Tesla on developing PV next generation technology at SolarCity's facility in Fremont, CA.
As part of the agreement, Panasonic will cover required capital costs in Buffalo and Tesla is making a long-term purchase commitment from Panasonic.
(Panasonic Release on December 27, 2016)

-The Company announced that its plant located in Apodaca, Nuevo Leon, will stop making vacuum cleaners and shift its production to car seat warmers and other automotive parts. According to Panasonic, the reason for the shift is due to narrowing margins for vacuum cleaners as Chinese products have gained presence in the US market. Production of auto parts is expected to begin in April 2017. The facility began production in 2000. Vacuum cleaner production will move to a facility in Malaysia. (From a Mexico-Now article on January 26, 2017)