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|In its first announcement of financial results after changing its corporate name, Panasonic posted higher first six months operating profit for the seventh consecutive year as well as record net income. What factors were behind such a performance?|
|One reason was that manufacturing and sales divisions and business domains worked well together, creating a sense of unity throughout the Panasonic Group. It was thanks to the efforts of all employees that we generated these results.|
|Please explain the background and reasoning for leaving full-year forecasts unchanged. Also, what is your sense about things at present based on conditions since the beginning of October?|
|Second six months conditions could be described as being extremely uncertain and severe. But that isn't to say that demand has dried up completely. Furthermore, these conditions present an opportunity to lay the groundwork for next fiscal year and beyond. Taking these things into account, it is important to deal with issues expeditiously, making sure that the Company does what has to be done with a cool head. Rather than establish several numerical goals that reflect the changeable business environment, Panasonic intends to closely but calmly survey current business conditions, including global trends leading up to the year-end shopping season. The Company plans to announce forecasts for the full-year after that when it releases its third-quarter results.|
|Please tell us what effect the sudden and rapid appreciation of the yen has had on operations.|
|Panasonic has been making use of natural hedges with the aim of shielding operations from foreign exchange fluctuations. However, this doesn't mean that the Company has been able to offset all fluctuations. In terms of earnings, a 1 yen change against the U.S. dollar still has a 2.8 billion yen effect on operating profit, while a 1 yen change against the euro has a 1.6 billion yen effect on operating profit. Compared with competitors, however, the monetary effect is relatively small.|
|The Nikkei Stock Average has plummeted. What effect will present stock prices have on Panasonic's earnings?|
|If these conditions persist, Panasonic might incur unrealized holding losses on available-for-sale securities. However, the Company believes that current stock prices do not reflect actual circumstances. Even though there is a financial crisis, the global economy as a whole is forecast to grow by 3% to 4%. Based on this forecast, the Company believes that it should continue to operate assuming that demand will increase to that extent.|
|Panasonic is constructing large factories, such as the Himeji plant and a fifth factory in Amagasaki. What effect will these facilities have on the Company's ability to achieve the stated goal in the GP3 plan of eliminating 300,000 tons of CO2?|
|The Himeji plant is scheduled to begin operations after fiscal 2010, so it hasn't been included in the planned reduction of CO2. Panasonic Corporation is endeavoring to eliminate 300,000 tons of CO2 by fiscal 2010 based on the business structure when the GP3 plan was formulated in fiscal 2008. Results for the first six months of fiscal 2009 were largely in line with plans. If the Company continues working as it has done up to now, it should achieve its goal as planned.|
|Panasonic has invested heavily in PDPs, semiconductors, batteries and other businesses, established infrastructure overseas and made other aggressive management moves. How do you plan to strengthen your management structure under the present difficult business conditions?|
|Panasonic will proceed as planned with investments in PDPs, batteries and LCDs. These investments don't account for even half of the Panasonic Group's entire investments, but the Company will think hard about ways to hold investments to a minimum. Furthermore, Panasonic is taking a positive approach to severe business conditions for the remaining six months of fiscal 2009 and intends to deal further with unprofitable businesses assuming these business conditions will persist. In B to B businesses, in particular, senior managers in charge of each business field will visit the top 30 companies individually. Taking into account the results of those visits, management will thoroughly examine capital expenditures, and consider structural reforms in the companies with unprofitable or low-profit businesses.|
|You mentioned that you would focus on growing markets and products in your strategies toward achieving double-digit growth in overseas sales. Please give specific details.|
|In the first six months of fiscal 2009, the growth regions stood in stark relief, with sales of consumer products and systems in BRICs and Vietnam up 25% year on year, while CIS, Middle East/Africa registered 17% growth and Asia Pacific recorded 10% growth during this period. Main products that drove growth in these regions were flat-panel TVs and digital cameras. In China and other Asian countries, home appliances also grew. Panasonic's AV products and home appliances are being well supported by relatively upscale customers. From next fiscal year onward, Panasonic intends to launch products focused on middle-income earners.|
|Please tell us how TV sales are performing in North America.|
|First six months sales were up year on year and were also better than planned.|
|Mobile phone manufacturers are experiencing a tough sales environment. Please give us an idea of how your mobile phone business is performing at present and your outlook.|
|Sales of "VIERA Keitai" mobile phones are growing steadily. Major growth cannot be expected in the second six months of fiscal 2009 because the domestic mobile phone market is nearing saturation, but Panasonic expects mobile phone sales to exceed last year's 7.28 million units. The Company is making steady progress toward its goal of reclaiming the number-one share in Japan. Furthermore, Panasonic has set its sights on developing mobile phone operations overseas in the post-GP3 plan period because mobile phone transmission technology will be standardized globally.|
|How successful were "Itakona" activities in the first six months of fiscal 2009? What do you mean when you say you will expand "Itakona" to "Intellectual Property"?|
|Price declines had a 210.0 billion yen impact on operating profit, but streamlining offset 205.0 billion yen of that. The benefits of streamlining are now much closer to fully offsetting the impact of price declines than they were a few years ago. Panasonic believes that this is one of the obvious successes of "Itakona" activities. "Itakona" activities aim to reduce costs as much as possible by drawing on the wisdom of employees and information at the product planning stage. "Itakona" in an "Intellectual Property" context involves clearly visualizing intellectual property risks at the stage before products are developed, with the aim of implementing initiatives to control such risks.|
This Q&A includes forward-looking statements (within the meaning of Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934) about Panasonic and its Group companies (the Panasonic Group). To the extent that statements in this Q&A do not relate to historical or current facts, they constitute forward-looking statements. These forward-looking statements are based on the current assumptions and beliefs of the Panasonic Group in light of the information currently available to it, and involve known and unknown risks, uncertainties and other factors. Such risks, uncertainties and other factors may cause the Panasonic Group's actual results, performance, achievements or financial position to be materially different from any future results, performance, achievements or financial position expressed or implied by these forward-looking statements. Panasonic undertakes no obligation to publicly update any forward-looking statements after the date of this Q&A. Investors are advised to consult any further disclosures by Panasonic in its subsequent filings with the U.S. Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934.
The risks, uncertainties and other factors referred to above include, but are not limited to, economic conditions, particularly consumer spending and corporate capital expenditures in the United States, Europe, Japan, China and other Asian countries; volatility in demand for electronic equipment and components from business and industrial customers, as well as consumers in many product and geographical markets; currency rate fluctuations, notably between the yen, the U.S. dollar, the euro, the Chinese yuan, Asian currencies and other currencies in which the Panasonic Group operates businesses, or in which assets and liabilities of the Panasonic Group are denominated; the ability of the Panasonic Group to respond to rapid technological changes and changing consumer preferences with timely and cost-effective introductions of new products in markets that are highly competitive in terms of both price and technology; the possibility of not achieving expected results on the alliances or mergers and acquisitions; the ability of the Panasonic Group to achieve its business objectives through joint ventures and other collaborative agreements with other companies; the ability of the Panasonic Group to maintain competitive strength in many product and geographical areas; the possibility of incurring expenses resulting from any defects in products or services of the Panasonic Group; the possibility that the Panasonic Group may face intellectual property infringement claims by third parties; current and potential, direct and indirect restrictions imposed by other countries over trade, manufacturing, labor and operations; fluctuations in market prices of securities and other assets in which the Panasonic Group has holdings or changes in valuation of long-lived assets, including property, plant and equipment and good will, and deferred tax assets and uncertain tax positions; future changes or revisions to accounting policies or accounting rules; as well as natural disasters including earthquakes and other events that may negatively impact business activities of the Panasonic Group. The factors listed above are not all-inclusive and further information is contained in Panasonic latest annual report on Form 20-F, which is on file with the U.S. Securities and Exchange Commission.
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