Panasonic Holdings Corporation announced on Tuesday its plan to aggressively pursue artificial intelligence-related business products to enhance profitability. This strategy comes as its electric vehicle battery business underperformed in the previous fiscal year, failing to meet its annual targets. The Japanese conglomerate, while releasing its full-year financial results, presented growth strategy materials outlining a goal to increase total adjusted operating profit to 750 billion yen (approximately $4.76 billion) or more by the fiscal year ending March 2029. AI infrastructure-related businesses are expected to contribute an incremental profit of 130 billion yen. The projected profit growth from AI is anticipated to stem primarily from the energy business unit, which supplies batteries to Tesla, and the industrial business segment. Amid these optimistic forecasts for AI-driven growth, the performance of Panasonic's automotive battery business within the energy segment has significantly weakened. This decline is attributed to U.S. tariffs, initial costs associated with ramping up production at a new U.S. factory, and decreased sales in its domestic Japanese market. The company forecasts that the energy segment's operating profit will reach 171 billion yen by the fiscal year ending March 2027. In contrast, the segment's profit for the recently concluded fiscal year was only 69.8 billion yen, and it reported a loss of 3.8 billion yen for the January-March quarter. In the last fiscal year, Panasonic's energy business profit fell by 42%, as reduced earnings from the automotive battery division offset profit growth in its industrial and home energy storage businesses. Panasonic stated that, in response to strong market demand, some of its factories in the United States and Japan have commenced production of battery cells specifically designed for data centers. Panasonic's stock has surged approximately 68% year-to-date and closed slightly below its all-time high on Tuesday.
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