Panasonic margin target ‘too low’

Tokyo: Panasonic forecast a 31% rise in annual profit on expanding flat TV sales and cost cuts but offered a three-year margin target that raised doubts about its ability to keep pace with Asian rivals.

Under a new business plan, Panasonic said it would aim to roughly double its operating profit margin to 5% or more by March 2013, while boosting sales by a third to €86 billion (10 trillion yen).

The margin forecast is half the 10% initially targeted by president Fumio Ohtsubo when he took the helm of the electronics maker in 2006, and well below the 8% clocked by South Korean rival Samsung Electronics last year.

“Aiming for an operating profit margin of 5% is too low,” said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.

“That target might have been OK in the past when its competition was in Japan. But now it pales in comparison to Samsung.”