Matsushita posts yearly results

Electronic News, July 8, 1996

Osaka--Matsushita Electric Industrial Co. Ltd. (MEIC) reported consolidated group sales for the fiscal year ended March 31, 1996 slipped 2 percent to 6,794.9 billion yen (or $64.10 billion)--primarily due to exclusion of revenues from MCA Inc., after the Japanese company's sale of a controlling interest in the U.S. entertainment firm.

Operating profit for the period ended March 31, 1996 rose 2 percent to 264.5 billion yen ($2.50 billion) from 260.2 billion yen a year ago.

If MCA revenues were excluded from previous-year results, sales and operating profit would have grown 5 percent and 11 percent, respectively, in FY96, the company reported.

Income before income taxes fell 67 percent to 76.6 billion yen ($723 million) from 232.2 billion yen, due mainly to a one-time, non-operating loss of 164.2 billion yen. Cited was the realization of foreign currency translation adjustments tied to the sale of the MCA stake.

Mainly due to this non-tax-deductible charge, MEIC saw a net loss of 56.9 billion yen ($537 million), versus net income of 90.5 billion yen in FY95. Minus MCA sale effects, income before income taxes would have grown 10 percent to 240.8 billion yen, as net income rose 27 percent to 107.3 billion yen. Consolidated annual net loss per common share was 27.12 yen (or $2.56 per American Depositary Share (ADS), each representing 10 common shares), versus 41.04 yen per common share a year ago.

Overseas markets were said to be "firm in general," with continued high growth in Asia. U.S. and European economies showed gradual slowing.

Domestic sales rose 8 percent to 3,727.1 billion yen ($35.16 billion) from 3,455.5 billion yen in the previous year, largely because of increased sales of information and communications equipment, factory automation equipment, electronic components, including semiconductors and batteries, MEIC reported.

Overseas sales fell 12 percent to 3,067.8 billion yen from last year's 3,492.7 billion yen, due mainly to the exclusion of MCA revenues from consolidated sales. With MCA revenues excluded from last-year results, overseas sales would have grown 2 percent, despite the negative effect of yen appreciation.

Video and audio equipment sales slipped 4 percent and 7 percent, respectively, due to intensified price competition, the negative effects of the strong yen and slow sales in China, although domestic sales of wide-screen TVs, personal headphone stereos and portable CD players gained.

Communication and industrial equipment showed 12 percent sales growth, led by strong domestic sales of mobile communications equipment, including cellular phones. PC/TV combination units also sold well in Japan, while sales of computer displays and other peripherals, as well as factory automation equipment, showed good growth in Japan and overseas.

Sales of electronic components grew 14 percent, with "solid increases" in semiconductors, cathode ray tubes and general components in Japan and overseas, fueled by robust demand from the information and communications industry, the company reported.

"Looking ahead, the Japanese economy is expected to show recovery with the revival of the private sector, which will be prompted by government economic measures. However, any optimism should be guarded as there are many uncertain factors," MEIC noted.

FY96 sales of electronic components, including semiconductors, rose 114 percent to $9.6 billion; communication and industrial equipment sales for the year rose 112 percent to about $19.0 billion.

For FY97 ending March 1997, MEIC forecasted a 6 percent gain in consolidated sales to about 7,200 billion yen, with pretax income of nearly 270 billion yen, up about 252 percent; net income is expected to reach about 115 billion yen. Excluding MCA sale effects in FY96, FY97 growth rates are expected to be about 12 percent for pretax income and 7 percent for net.