While the Tesla supplier encourages cash management, Panasonic actively follows developments in the United States and China to navigate the technology gap between the world’s two largest economies.
CEO Yuki Kusumi said in an interview with the Financial Times that the Japanese conglomerate will conduct a review to streamline its broad business portfolio, which includes car batteries, air conditioners and microwave ovens, after two years to make operations more streamlined and cost-effective.
“It is true that the separation of America and China is becoming a big challenge for us,” Kusumi said, adding that the company is studying more car battery materials in the US that were previously bought in China.
“But both the US and China are major markets that are constantly growing,” he said. “For us, both markets are important and we bring each business to a situation where they are less vulnerable to political influence.”
The US is a particularly important market for Panasonic’s car battery business. The Japanese group operates a $5 billion gigafactory in Nevada for electric vehicle maker Tesla.
Panasonic plans to invest $4 billion to build a plant in Kansas, a decision Kusumi said would include $369 billion in incentives to support clean energy efforts as U.S. President Joe Biden’s recent approval of a tax-reduction bill.
The Kansas plant could be funded in part by ¥400bn ($3bn) Panasonic has approved over three years until March 2025 to invest in growth areas such as EV batteries, supply chain software and air conditioners. Another ¥200bn has been allocated. To develop hydrogen fuel cells and other new technologies.
But Panasonic has made a strong bet on expanding home appliances and refrigeration systems in China, where local governments are given autonomy over operations, unlike in other regions.
Kusumi said the company may try to sell Chinese-made products in Asian markets that are not subject to U.S. export controls designed to hamper Beijing’s access to and ability to develop advanced semiconductors.
“To be honest, we can’t be optimistic about the market situation next year,” Kusumi said, adding that a stronger outlook will increase the need for each Panasonic division to be more proactive about inventory management and accelerate the conversion of revenues into cash flow.
In late October, Panasonic cut its annual profit forecast by 11% to ¥320bn, slowing its acquisition of automotive business and US supply chain specialist Blue Yonder for $7bn in 2021.
Geopolitical challenges loomed as Kusumi tried to take Panasonic to the next level of growth. After taking over as CEO in April 2021, he avoided restructuring non-core assets and focused the group on green transition efforts.
In addition, the Japanese group changed to a holding company structure to establish financial discipline and facilitate faster decision-making. According to Kusumi, these efforts revealed which divisions were more competitive and lagging behind despite the changes made during his tenure.
Some analysts say Panasonic’s sprawling portfolio lacks focus and warn that many of its businesses are vulnerable to macroeconomic cycles.
“We will move to a new type of portfolio management,” Kusumi said, adding that he will review the capital structure of some business units.
