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May 7, 2010

Panasonic Announces New Midterm Management Plan

Osaka, Japan (May 7, 2010) - Panasonic Corporation (Panasonic [NYSE: PC]) today announced its new midterm management plan that covers the next three years from April 2010 to March 2013. Panasonic President Fumio Ohtsubo unveiled the plan called GT12 (Green Transformation 2012) that is designed to fill Panasonic Group with strong growth potential. President Ohtsubo's presentation is summarized as follows:

1. Reviewing the Achievements under GP3 Plan

(1) Goals of GP3 Plan: Under the previous three-year management plan, called GP3 Plan, which was launched in April 2007, Panasonic undertook various measures to achieve steady growth with profitability, setting the three numerical targets: 10 trillion yen in sales, ROE of 10 percent and reduction of CO2 emissions in manufacturing by more than 300,000 tons compared with the levels achieved in the fiscal year ended March 2007 (fiscal 2007).

Consolidated financial results for fiscal 2010

  • -Sales: 7,418.0 billion yen
  • -Operating profit: 190.5 billion yen (operating profit to sales ratio: 2.6%)
  • -Net income (attributable to Panasonic Corporation): -103.5 billion yen (net income to sales ratio: -1.4%)
  • -CO2 emission reduction in production by 840,000 tons
  • compared to level of FY2007 (3.98 million tons)

(2) Assessment: Although the company has attained its CO2 reduction goal, sales and ROE in the period fell far below its targets. In order to fulfill these two goals, Panasonic pursed double-digit growth in overseas sales for consumer and systems products. However, its sales outside Japan were 72 percent and its sales in BRICs and Vietnam were 73 percent of the targets set in the plan. The company could not achieve its sales targets in all the four ABCD strategic business areas (the A stands for appliance solutions, the B for black-box devices, the C for car electronics and the D for digital AV networks). In terms of manufacturing-oriented innovation, Panasonic managed to attain some positive results in strengthening its management structure by lowering its break-even point and reducing fixed cost.

2. GT12 New Midterm Management Plan

(1) Positioning: Panasonic is aiming to become the No. 1 Green Innovation Company in the Electronics Industry towards 2018, the 100th anniversary of its foundation. As the first step towards the goal, Panasonic will devote the next three years to making group-wide efforts in shifting its paradigm for growth and laying a foundation to be a Green Innovation Company, while integrating its contribution to the environment and business growth. By the time this plan is complete in the fiscal year ending March 2013, Panasonic Group should be a company filled with significant growth potential.

(2) Themes: The plan focuses on the two themes: shifting its paradigm for growth and building a foundation to be a Green Innovation Company. To achieve the paradigm shift for growth, the company will shift its business from existing to new fields such as energy, from Japan-centric to globally-oriented and from individual products to solutions and systems incorporating a variety of products.

To lay its foundation for a Green Innovation Company, Panasonic will increase profitability based on growth by pursing global excellence indexes. They include such multiple goals as achieving 10 trillion yen or more in sales, 10 percent or more each in operating profit and ROE, and having multiple key products that hold a top market share in the world. Panasonic will also enhance its contribution to the environment, laying a groundwork to be No. 1 in green indexes. The company aims to claim a top status with all the following factors: contribution in CO2 emission reductions and recycling resources, the size of its energy systems business and a sales ratio of No. 1 environmentally conscious products.

(3) Group Management Goals: For the fiscal year ending March 2013, the last year of GT12, Panasonic sets the following targets: 5 percent or more in operating profit ratio, 10 trillion yen in sales, a three-year accumulative total of over 800 billion yen in free cash flow, 10 percent in ROE and 50 million ton reduction in CO2 emissions*.

* Comparing CO2 emissions from production activities and those generated from the use of the company's products with the level of the fiscal year ended March 2006, assuming no remedial measures were taken until the end of the fiscal year ending March 2013.

(4) Transformation Indexes: The company has set a group of "transformation indexes" to shift the paradigm for growth mentioned above.

  Index >FY20101) FY2013 FY2019
(Direction)
New Business Fields Sales ratio of six key businesses 35% 42% 55% or more
Sales of energy systems business 540 billion yen 850 billion yen 3 trillion yen or more
Overseas Sales in emerging countries2) 440 billion yen 770 billion yen -
Overseas sales ratio 48% 55% 60% or more
Solutions & Systems Sales of systems and equipment business 2.2 trillion yen 2.6 trillion yen 3.5 trillion yen
Overseas sales ratio 33% 39% 50% or more

1) Including SANYO's figures on an annual basis.

2) Panasonic's sales of consumer and systems products in BRICs + Vietnam and MINTS + B (Mexico, Indonesia, Nigeria, Turkey, Saudi Arabia and the Balkans)

(5) Midterm Strategy for Panasonic Group:

i) Growth Driven by Six Key Businesses: Focusing on six key business areas, Panasonic aims to increase sales of these businesses by 1.2 trillion yen, which accounts for more than 80 percent of the total sales increase the company targets. The six business areas are energy systems, heating/refrigeration/air conditioning, network AV, healthcare, security and LED. The company will allocate 54 percent of its total capital expenditures and 67 percent of its head-office R&D investment to these businesses over the next three years, drastically shifting its management resources to growth businesses.

Energy Systems Business: Panasonic aims to generate sales of 850 billion yen from its energy systems business for the fiscal year ending March 2013 (fiscal 2013), which translates into an annual average growth rate of 16 percent for the three years.

  • In the solar cell business, Panasonic aspires to become the leader in the Japanese market by achieving sales of 900 megawatts of cells in fiscal 2013 and one of the top three global leaders in fiscal 2016. On July 1, 2010, the company launches Panasonic brand HIT solar cells boasting the world's top-class energy conversion efficiency.
  • Panasonic's group-wide sales network will support the sales of the HIT solar cells. Panasonic makes full use of its existing sales channels for consumer electronics, electrical construction materials and housing in the Japanese market. In the overseas market, the company will develop its systems sales including energy storage and energy management solutions. At the same time, it will accelerate the development of next-generation solar cells utilizing Panasonic's technologies, manufacturing expertise and resources. It will consider the possible use of its PDP plant in Amagasaki City in western Japan for the development.
  • In the fuel cell business, Panasonic will strengthen its cost competitiveness to expand the business.
  • In the lithium-ion rechargeable battery business, Panasonic aims for 500 billion yen in sales to maintain the world's No. 1 market share by maximizing its group synergies. To achieve the synergies, Panasonic and SANYO Electric Co., Ltd. will integrate their business strategies into one and optimize their strengths to the fullest extent. As part of these efforts, Panasonic and SANYO will promote collaboration in cell development and production lines.
  • Panasonic will combine the group's expertise to lead the world in the development of high-capacity batteries and secure profit in the consumer-use market. Panasonic will also strengthen its cost competitiveness by developing new materials and launch products in the growing markets such as home-use storage batteries and batteries for eco-cars.
  • In the energy management area, Panasonic will provide energy solutions that combine energy creation, energy storage and energy saving with energy management. Corporate Division for Promoting Energy Solution Business, which was set up on April 1, 2010, takes a leadership role in developing cross-domain energy systems products throughout the all group companies. The company aims to develop systems and equipment products that can integrate controls of electricity, temperature and information by linking devices and equipment in the energy creating, energy storage and energy saving categories.

Heating, Refrigeration and Air Conditioning Business: Panasonic aims for 670 billion yen in sales by posting an annual average growth rate of 7.4 percent for the next three years.

  • The company will speed up its pace to expand its room air conditioners business in the global market. In Europe, it will develop equipment sales channels, such as stores specialized in air conditioning. In emerging countries, Panasonic will focus on local leader models that meet with local needs, taking advantage of low-noise and energy-saving technologies.
  • As to commercial-use products, Panasonic will expand its product lineup for large-sized air conditioning, heat-pump type water heaters, commercial-use refrigerators and showcases, targeting the markets in Japan, Europe, China and Asia. With its solutions that encompass the entire store, the company approaches convenience stores and supermarkets to propose comprehensive controls that combine its cooling and heating conditioning systems, energy systems, security, etc.

Network AV business: Panasonic aims for 2.15 trillion yen in sales for fiscal 2013 with an average annual growth rate of 10 percent.

  • The company will make its flat-panel TV business profitable by strengthening its competitiveness in terms of cost structure, product and marketing.
  • To increase profitability of the flat-panel TVs, Panasonic will improve its cost structure by shifting its finished product and module assembly to Asian countries, halving the number of components and actively adopting OEM and ODM services. The company will shift its emphasis to 3D TVs and LED-backlight LCD TVs and carry out intensive advertising investment in major countries as well as increase the number of products for high-volume segments. Panasonic plans to produce 30 million units of flat-panel TVs in fiscal 2013, which compares with 15.8 million units produced in fiscal 2010. Of the 30 million units, the company intends to produce more than 11 million units in the emerging markets.
  • The company will strengthen competitiveness of its flat-panel TVs It is determined to make the Panasonic brand synonymous with 3D TVs and increase the ratio of 3D TVs to 70 percent of the total flat-panel TVs in fiscal 2013. With regard to LCD TVs, the company will emphasize its LED-backlight TVs, introducing this year LED models that offer the industry's top-class power saving performance.
  • In the digital still camera business, Panasonic aims to be one of the industry's top three makers by achieving sales of 20 million units per year. In the digital interchangeable lens system camera business, the company strives to achieve the world's smallest and lightest camera. Establishing a dedicated marketing structure for its single lens cameras in each major region of the world, Panasonic will target a market share of 10 percent or more in the segment. In the compact camera category, Panasonic aims to capture new demand mainly in emerging countries by strengthening its lineup through collaboration with SANYO. Further, Panasonic will advance its black-box technologies in lenses and optical image stabilizer to build a super-thin, super-light and super-high picture quality camera.

Next-generation Key Businesses: Panasonic will build up its healthcare, security and LED (excluding LED backlight TV) businesses, aiming to generate combined sales of 1 trillion yen in fiscal 2016 ending March 2016. For fiscal 2013, the company targets 540 billion yen in sales from these three businesses.

  • In the healthcare business, all Panasonic Group companies will unify its strategies focusing on in-hospital work assistance, home healthcare, and early diagnosis and treatment. As part of this effort, Panasonic Shikoku Electronics Co., Ltd. will make a full-scale shift from visual, storage, and device businesses to healthcare business. It will be renamed Panasonic Healthcare Co., Ltd. on October 1.
  • In the security business, Panasonic targets an increase of 100 billion in sales by expanding overseas sales. In particular, the company increases sales of its LINK products that combine network cameras and communications systems, building up engineering capabilities overseas and promoting alliances with large companies.
  • In the LED business, Panasonic plans to increase sales by 4.5 times compared to the sales in fiscal 2010. To achieve the goal, the company will promote its global expansion, establishing an overwhelming market share in Japan and actively developing overseas sales channels.

ii) Expanding Overseas Business Focusing on Emerging Markets: By shifting its business from Japan-centric to globally-oriented, Panasonic will increase its overseas consumer and systems product sales ratio from 48 percent in fiscal 2010 to 55 percent in fiscal 2013. It aims to increase sales of consumer electronics equipment by 330 billion yen in the emerging markets including BRICs + Vietnam and MINTS + B countries (Mexico, Indonesia, Nigeria, Turkey, Saudi Arabia and the Balkans), targeting high-volume segments in each market.

  • Strengthening Customer-oriented Products Planning Capability: Panasonic will establish Global Consumer Research Center in its head office in fiscal 2011 to step up its research capability to design and develop products that cater to unique lifestyles in each market. The company will share its knowledge with other research centers and develop an optimized approach to the product planning.
  • Accelerating Development of Products for High-volume Segment: Based on the lifestyle researches, Panasonic will develop products for the markets, adding the features that consumers need and taking out they do not want. With those products, the company aims to expand its sales of products for high-volume segment to 1 trillion yen in fiscal 2013.
  • Global Expansion of Home Appliances Business: Panasonic aims to attain an annual growth rate of 15 percent in white goods sales overseas, including air conditioners, refrigerators, microwaves, vacuum cleaners and small kitchen appliances.
  • The company focuses on Japan, China and Asia as core markets and seeks for a significant sales increase in these markets by reorganizing and building up existing manufacturing and sales bases. In Europe, it will quickly enhance its product lineup by using local OEM suppliers and other outside resources. In India and Brazil, Panasonic will set up new manufacturing sites to thoroughly strengthen its business in these countries. Also, the company will fortify its core environmental technologies such as heat pumps, inverters and green materials.

iii) Reinforcing Systems and Equipment Business: As electronics products are increasingly commoditized, Panasonic will shift its business paradigm to solutions business and change its business structure by fully utilizing the company's comprehensive capabilities. In fiscal 2013, it aims to generate 2.6 trillion yen from its systems and equipment business and increase overseas sales ratio in the business to 39 percent over the next three years.

Under the direction of Corporate Division for Promoting Systems and Equipment Business, Panasonic will work out on its idea of "comprehensive solutions" that enables development, planning and maintenance of a solution package dedicated to each of the seven major markets, including educational facilities, hotels, medical facilities, transportation and airports, offices and factories, retail and distribution facilities and homes.

iv) Collaboration with SANYO: Through collaboration with SANYO in business and strengthening of its management structure, Panasonic strives to generate over 80 billion yen in operating profit as a fruit of synergy between the two companies by March 2013. Panasonic has set up Strategic Working Committee for Group Collaboration on April 1, 2010 to maximize the synergies. For example, in the appliances business, they will introduce collaboration products and consolidate their business strategies by integrating their product development processes and streamlining their bases. They will also consolidate material procurement, which is expected to cut the procurement cost. Sharing of infrastructure and expertise, including overseas warehouses and offices, will reduce the related cost. The two companies will unify their group visions. For example, the group companies will share Panasonic's Eco Ideas.

(6) Management Innovation for Supporting Group Strategy:

i) Initiatives on Environmental Contribution: Panasonic will vigorously push forward its efforts in reducing CO2 emissions. In addition to CO2 reductions in its production activities, the company will reduce those emitted from the use of its products, aiming to peak out in fiscal 2019 as a result of its group-wide efforts. Indirect reductions, such as those through supply of devices including rechargeable batteries, will also play a significant role in achieving the goal.

At the same time, the company will maximize recycling-oriented manufacturing and seek zero waste from its production activities in fiscal 2019. For fiscal 2013, Panasonic will expand the use of recycled resources and bring up its ratio against the total resources used to over 12 percent. In factories, the company will pursue achieving zero CO2 emissions and lift the ratio of resources recycled at plants to over 99 percent. Panasonic will adopt 3Rs (reuse, reduce and recycle) in its product development and strengthen the development of its recycling technologies.

ii) Strengthening Capability to Generate New Businesses: Panasonic's internal business domain companies will lead Panasonic's efforts in boosting its ability to develop new businesses by investing 230 billion yen in new businesses with an aim of generating total sales of over 1.1 trillion yen over the next three years. The head office will make strategic investments exceeding 77 billion yen over the same period. On April 1, 2010, the company set up Innovation Promotion Center under Corporate R&D Group to accelerate the efforts.

iii) Global Human Resources Development: Globalization of human resources is one of the challenges in the management innovation. Panasonic will increase foreign members on the management boards of its business domain companies, set up global human resource meetings and create a system for nurturing foreign executives. The company will establish "Corporate Global Engineer Trainee System" and reinforce its "Working in Japan Program."

iv) Cash Flow-Oriented Management: Panasonic aims to generate 800 billion yen or more in free cash flow over the next three years. The company will carry out business portfolio strategy dividing its business into four categories to make its best investment decision, leveraging its growth capability and profitability. The four categories are the businesses to support next generation, the six key businesses, the businesses to be revitalized and the businesses to be withdrawn.

The company will also improve cash flow generation capability at operating sites in its Midterm Enhanced Cash Flow Management Project. It will maximize investment return by increasing monitoring of large-scale investments, and improve working capital by developing its theoretical inventories applied throughout all the group companies. Further, Panasonic will centralize procurement and strengthen design VE (value engineering) to cut cost and instill cost management culture into company DNA to improve marginal profit ratio.

Disclaimer Regarding Forward-Looking Statements
This press release 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 press release 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 press release. 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 and its other filings.
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, Asia and other 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 possibility of the Panasonic Group incurring additional costs of raising funds, because of changes in the fund raising environment; 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 including the acquisition of SANYO Electric Co., Ltd.; 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 goodwill, deferred tax assets and uncertain tax positions; future changes or revisions to accounting policies or accounting rules; as well as natural disasters including earthquakes, prevalence of infectious diseases throughout the world 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's latest annual report on Form 20-F, which is on file with the U.S. Securities and Exchange Commission.

About Panasonic

Panasonic Corporation is a worldwide leader in the development and manufacture of electronic products for a wide range of consumer, business, and industrial needs. Based in Osaka, Japan, the company recorded consolidated net sales of 7.42 trillion yen (US$79.4 billion) for the year ended March 31, 2010. The company's shares are listed on the Tokyo, Osaka, Nagoya and New York (NYSE: PC) stock exchanges. For more information on the company and the Panasonic brand, visit the company's website at http://panasonic.net.

Media Contacts:

Akira Kadota (Japan)
International PR
Tel: +81-3-6403-3040
Panasonic News Bureau (Japan)
Tel: +81-3-3542-6205
Jim Reilly (U.S.)
Tel: +1-201-392-6067
Anne Guennewig (Europe)
Tel: +49-611-235-457

Investor Relations Contacts

Makoto Mihara (Japan)
HInvestor Relations
Tel: +81-6-6908-1121
Yuko Iwatsu (U.S.)
Panasonic Finance (America), Inc.
Tel: +1-212-698-1365
Hiroko Carvell (Europe)
Panasonic Finance (Europe) plc
Tel: +44-20-7562-4400
*The content in the following news releases is accurate at the time of publication but may be subject to change without notice. Please note therefore that these documents may not always contain the most up-to-date information.

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