Panasonic cuts outlook as battery business struggles

Investing.com -- Panasonic reported disappointing second-quarter results for fiscal year 2026, with operating profit falling 41% year-over-year to ¥78.0 billion, missing consensus estimates of ¥110 billion.

The Japanese electronics giant has revised down its full-year guidance, citing U.S. tariffs and challenges in its in-vehicle battery business. Adjusted operating profit for the quarter decreased 26% to ¥90.4 billion, while revenue increased slightly by 1.9% to ¥2.13 trillion.

The Energy segment was the primary drag on performance, particularly the in-vehicle battery business, which suffered from lower production volumes at Japanese factories and price revisions.

Despite receiving ¥24 billion in operating profit from IRA subsidies and positive contributions from its high-margin backup battery business, the entire Energy segment reported just ¥1 billion in operating profit on revenue of ¥227 billion.

For the full fiscal year ending March 2026, Panasonic now expects adjusted operating profit of ¥470 billion, down from its previous forecast of ¥500 billion. The company also reduced its operating profit guidance from ¥370 billion to ¥320 billion and earnings per share from ¥132.79 to ¥111.36.

The Connect and Industry segments showed resilience, benefiting from demand in generative AI-related businesses and process automation. The backup battery business also demonstrated strong growth, driven by data center demand and lower material costs.

Panasonic’s U.S.-based battery production remains compliant with Inflation Reduction Act requirements, potentially giving it tariff-free market access and opportunities for market share gains.

Execution in the Energy segment remains a key risk for the company. Despite management’s stated intention to address low return-on-invested-capital businesses, analysts note that many such businesses remain unaddressed.

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