Eco Solutions Company Business Policy - Panasonic USA · 2016. 5. 18. · related business strategy...

Copyright (C) 2016 Panasonic Corporation All Rights Reserved.

Eco Solutions Company

Business Policy

May 18, 2016

Panasonic Corporation

Eco Solutions Company

President Tamio Yoshioka

Notes: 1. This is an English translation from the original presentation in Japanese.

2. In this presentation, “FY17” refers to the year ending March 31, 2017.

Eco Solutions Company Business Policy

FY16 Results

1


Eco Solutions Company Business Policy 2

FY16 Results

Sales Measures such as streamlining did

not offset the impact of decreased

sales.

Sudden shrink in the domestic residential

market for the PV power generation business

and unexpected delayed recovery of the

domestic housing market

OP

DOWN DOWN

１,６６６.０ Sales

OP (%) ９５.３ (５.７％)

FY15 FY16

７８.４ (４.９％)

１０４.５ (６.１％)

FY16(f)

１,７２６.０ (vs. FY15 -3%)

１,６１０.８

* Based on US GAAP

(yen : billions)


FY16 Results

3

[OP Analysis]

７８.４９５.３

[Sales Analysis]

FY15

１,６１０.８

１,６６６.０

FY16

FY15 FY16 -１６.９

-５５.２

Overseas

sales

increase Exchange

rate effects

Domestic

sales

decrease Price

declines

Overseas

sales

increase

Domestic

sales

decrease

Exchange

rate effects Streamlining

& Price

declines

Fixed-cost

increase

＋１１.６＋４.６ ‐２２.５ ‐４８.９

＋０.３＋３.４

‐１０.５ ‐１７.３

＋７.２

* Based on US GAAP

(yen : billions)



FY16 Results

4

[Effects of decreased sales in the Solar Business]

Revenue increased if the PV power generation

system business (Solar Business) is excluded.

FY15 FY16

１,６６６.０

Increase in sales

of overseas Solar

Business

Increase in sales

excluding the

sales of the Solar

Business

Decrease in sales

of domestic Solar

Business

１,６１０.８

* Based on US GAAP

(yen : billions)


PV Power Generation System Business (Solar Business)

5

About -５０％ (compared with FY13)

(estimate)

FY13 FY16 FY14 FY15

１００

Sales

０

５％

０％

About -２５％

OP ratio

１,９００ＭＷ１,５００ - １,６００ＭＷ２,４００ＭＷ２,０００ＭＷ Size of

residential market

１００６２８６７１ Market unit

price*

(system)

１０％

*Based on the unit price in FY12 which is set at 100.

Source: IHS TECHNOLOGY “Prices of PV System in Japanese Housing Market

Market size (in value terms)

* Based on US GAAP

(yen : billions)



6 large scale BDs

6

Business unit FY16 results

Results of

evaluation Sales vs. FY15 OP vs. FY15

Lighting

Business Division ３２０.３ +１％２０.３＋５.４ ○

Housing Systems

Business Division ３５３.６ -4％１４.０＋２.８ △

PanaHome

Corporation ３５３.０ +８％１５.９＋３.１ ○

[Reference]

* Based on US GAAP

(yen : billions)

* BD stands for business division


Business Portfolio

7

12

Panasonic Ecology

Systems Co., Ltd.

Energy Systems

Business Division

Sales

１０％

５％

２００４００

OP ratio

０

Lighting Business

Division

Housing Systems

Business Division

FY13

FY16

*Size of circles indicates amounts

of profits.

(FY13 → FY16)

* Based on US GAAP

(yen : billions)


Eco Solutions Company Business Policy 8

Toward FY19


Goals

9

FY17(f) FY16 FY19(f) Goals

１.４

０.６

２.０

１.３

０.６

１.９

１.６

０.７

２.３

Residential

２.０

Non-

residential

Minimum０.８

Minimum ２.８

ＢｔｏＢｔｏＣ

ＢｔｏＢ

*Group’s total

The sales goal was revised by excluding the noncontiguous growth through M&A, and reviewing of the

timing PanaHome can achieve targets (such as the ones of their overseas businesses), and changes in

the domestic market for the PV power generation system business.

Including

0.4 by

PanaHome

Including

0.4 by

PanaHome

Including

0.5 by

PanaHome

*Based on IFRS

Sales

OP ratio ４.８％５.５％６.０％ Minimum ７.５％

(yen : trillions)



Priority investment

Strategic Framework

10

Growth in

residential-

related

business

Growth in non-

residential-

related

business

Remodeling business

Overseas residential-related business

New contraction and urban development

business

Elderly care business

Residential energy management business

LED solution business

Non-residential energy management

business

Engineering business

Tokyo Olympics and Tohoku region

rebuilding solutions

Development of new business

Do

me

stic

Ove

rse

as

Ove

rse

as

Dom

estic

+145B Yen

+10B Yen

+45B Yen

+10B Yen

+90B Yen

FY16⇒FY19

sales increase

+30B Yen

+3B Yen

+28B Yen

+7B Yen

*Based on IFRS


FY17 Business Policy

11



Market Environment

12

Japan

Overs

eas

FY17 forecast

New housing starts <Time lag has been

considered> 891,000

Housing

remodeling

Non-housing starts <Time lag has been

considered>

Construction investment <ACTION areas + America>

Source: Estimated by our company based on the reports by Japan

Center for Economic Research, Yano Research Institute Ltd.,

Research Institute of Construction and Economy, and IHS

*ACTION areas: ASEAN, China, Turkey and India

vs. FY16

+/-０％

6.6 trillion yen +２％

28.32 million m2 +/-０％

4,195 billion dollars +６％

Market index

+１％

*When consumption tax hike is postponed

※The sum of the store, warehouse, office and factory


FY17 Financial Target

13

１,５９２.７ Sales

OP (%) ９０.０ (５.５％)

７６.３ (４.８％)

(vs. FY16 +3%)

１,６４０.０

FY16 FY17(f)

Sales Increasing sales and profit and

streamlining to offset the price

declines and increases in fixed costs

for growth.

Inside Japan, increasing the sales in the

growing areas such as the remodeling

business, and outside Japan, expanding

mainly in the strategic regions.

OP

UP UP

*based on IFRS

(yen : billions)




FY17 Financial Target

14

７６.３

FY16

１,５９２.７

Domestic

sales

increase

FY17(f)

FY16 FY17(f)

＋４７.３

＋１３.７

Domestic

sales

increase

９０.０

１,６４０.０


*based on IFRS

[OP Analysis]

[Sales Analysis] Overseas

sales increase Exchange

rate effects

Price

declines

Overseas

sales

increase

Exchange

rate effects

Streamlining

& Price

declines Fixed-cost

increase

＋２８.９ ‐２２.９

＋６１.３ ‐２０.０

＋５.６＋８.８

＋２２.０

‐２９.２＋０.７＋５.８

Other

(yen : billions)

Expansion of

(strategic) investment


FY17 Sales Goals

15

FY16 FY17(f) ＋４７.３

１,６４０.０

(by strategy)

“Age Free”

(Elderly care)

business

Remodeling

business

Residential

energy

management

business

Overseas

business

Tokyo

Olympics and

Tohoku region

rebuilding

solutions

Non-residential

energy

management

business Engineering

business LED

solution

business

Residential-related business

Non-residential-related

business

９６０.０９９０.０

FY16 FY17

６３２.７６５４.０

FY16 FY17


*based on IFRS

(yen : billions)

＋７.５

＋２.４＋５.７

＋０.２＋８.２

＋１２.７

＋０.２

‐２.２

‐４.０

Decrease

in sales

of Solar

Business

and others

Elimination

and others

１,５９２.７＋１６.６



Remodeling Business

16

Increasing the growth rate by making upfront investments such

as the launch of a general remodeling company

Improving

customer

contacts

4 new LIVING

showrooms

opened

Reinforcing

designing and

construction systems

Offer a wider range

of products for

remodeling homes

Strengthening lineup of

mid-to-high end products

Cross-Value

Creating living space

value

ＡＰＡＶＣＥＳ

Newly opening 50

directly managed

shops

Increase in sales staff

Increase in design staff

Custo

mer

Panasonic Home

Renovation Co., Ltd.

Panasonic Home Renovation Division (Eco Solutions)

Supporting policies

Strengthening collaboration

with the Group and

promotion store

Residential-

related business

strategy ①

255.9 billion yen in FY17(f)

(vs. FY16 +7%)

Reform Club

Increase to 400 shops

※Group Sales Goals 350 billion yen


[Skeleton]

Creation of living space value Providing Panasonic Group’s original new “living space value” through

“equipment and building products / electrical construction materials /

consumer electronics × housing”

17

Constructional

materials and

exterior materials

Equipment and

building products [Infill]

Electrical construction materials Consumer electronics

Living space

value

http://www.google.co.jp/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&ved=0ahUKEwjpq9OsgJXLAhWiXaYKHQyFDxUQjRwIBw&url=http://panasonic.co.jp/es/pestst/understanding/&psig=AFQjCNH1osk0ZfgaE55vntm7lsjIyTuBjA&ust=1456561072897093



Expanding the service business and leading growth of the “Age free business”

18

The figures indicate the number of opened AGE-FREE elderly care service centers.

+30 sites (total 155 sites)

The figures indicate the number of opened AGE-FREE houses.

Sales grew by about 1.3 times in the years from FY13 to FY16 and the growth rate is increasing.

+20 sites (total 45 sites)

Elderly care services business

Elderly Housing with support services business

Uplifting CS with work environment improvement

37 billion yen in FY17(f)

(vs. FY16 +25%)

IT introduction for

recording work

Reducing workload

Enriching HR development & training program

Improving safety

Monitoring with IoT

“Age Free”(elderly care)

Business

Residential-

related business

strategy ③

Service business Improving the provided values

※Group Sales Goals 50 billion yen


Residential Energy

Management Business Expediting promotion of HEMS for standardization

19

PV power generation system business Smart HEMS

Pursuing further streamlining

Maximizing profit by fully utilizing the existing

operating resources

Improving the system for overall proposal

・Gaining effects of investment for

streamlining / increases in production

(PV power generation + Storage battery + HEMS)

Improving compatibility with the ZEH by

proposing “total energy management” Increasing domestic share

FY16 FY15

New service

applications

[Number of sold “Smart Cosmo” panels]

About six-fold

expansion

Increasing speed of promotion


(vs. FY16 +6%)

Creation of an

infrastructure is

expanding steadily.

Residential-

related business

strategy ④

・Introducing strategic new

products for each market

・Widely promoting new

construction method



Overseas Business

20

Growing in ACTION areas + North America. Potential in Middle East and Africa.

・ Increasing share in the wiring

devices market

・ Newly developing the

businesses of LED lighting, etc.

・ Collaboration with PanaHome

for promotion in ASEAN

Action areas

Expediting development of

e-commerce

ASEAN, India and Turkey

China

North America

Middle East and Africa

State of Baja California,

Mexico

Expediting the market development and

starting the full-scale promotion

・ Establishing the marketing controlling company

・ Use of Anchor, ViKO Wiring equipment, lighting fixtures, air cleaners, etc.

Accelerating business expansion of ventilating

system + full-scale development of PV business

・ Establishing “Made in market” system

・ PV business : Promotion of “HIT” superiority


(vs. FY16 +9%*)

Residential-

related business

strategy ⑤

*Effects of exchange rates are excluded.

Reinforcing promotion of wiring equipment and

expediting new businesses


Facility and emergency lighting

Store lighting

Outdoor lighting

LED Solution Business

21

Business of lighting fixtures in Japan

Development of each market &

strengthening the proposal function

[Changes in Panasonic’s market

share in non-residential market]

FY15 FY16

５０％

FY14

～～

４０％

Capturing demands for LED and realizing strong growth

No. 1 second to

none

・ Improving proposal for each application.

Expanding product lineup.

・ Expanding the rendering lighting

business

Overseas LED equipment business

・ <China> Expanding lineup of the performance-prioritized products in the retailer field

・ <India> Responding to rapidly expanding LED market

・ <Indonesia> Strengthening of design and proposal teams. Improving lineup.

FY13

・ Improving cost competitiveness and promotion of

value-added products


(vs. FY16 +5%)

Non-residential-

related business

strategy ①

Rein

forc

ing th

e

pro

posal te

am

s

Increasing the speed of promotion in China, Indonesia and India

http://www.google.co.jp/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjg-afV9KjMAhVLpJQKHasQDx0QjRwIBw&url=http://www2.panasonic.biz/es/ai/products/search/detail?dep=&c=search&item_no=YA56115&item_cd=YA56115_001&bh_cd=1&b_cd=101&style=YA56115&psig=AFQjCNGmx3-uygotuFJ15EsvcB6Ku9vNhA&ust=1461643539374625



Engineering Business

22

Environmental engineering business

Advancing “challenges in new areas” based on the domestic

engineering business

Expansion of chemical recycling business

Entering the livestock industry

Overseas engineering business

PV solution business in North America

Developing application of

water solution

technologies

Establishing know-hows for dairy/poultry

farming through collaboration with external

partners and groups

Sales expansion of about 22 times

in 4 years

FY16 FY17 (f) FY13

Electricity storage solution business

Establishing the basis

of electricity storage

solution business


(vs. FY16 +7%)

Non-residential-

related business

strategy ③

Expansion of 22 times


３００

Lighting Business Division

FY17(f) vs. FY16

Sales 338.8B yen +18.5B yen

OP 24.3B yen +11.3B yen

23

２４.３

１３.０

FY16 FY17(f) ＋１１.３

Sales

increase

Exchange

rate effects,

expenses,

etc.

Streamlining

& Price

declines

FY15 FY16 FY14

５％

FY17(f)

[OP Margin]

FY13 ０％

[OP Analysis] [Changes in Panasonic’s market share in domestic LED products market]

FY14 FY15 FY16 FY17(f) ０

ＬＥＤ

Existing

lighting source

products, etc.

Sales growth by enhancing LED lighting business performance

[Sales of Lighting BD]

（％）

[LED lighting sales ratio of whole Lighting BD sales]

～～

５０

３０

*Figures for FY17

are based on IFRS.

Profitable growth Implementation of structural reforms

*Figures for FY17 are based on IFRS.

７０

５０

４０

（％）

6 large scale

BDs

*Based on IFRS

*Based on IFRS

＋６.２

＋１.０

‐４.５＋８.６

Fixed-cost

increase

(yen : billions)

(yen : billions)



Implementation of structural reforms

Housing Systems Business Division

FY16 FY17(f) ＋２.７

１３.７１６.４

Exchange

rate effects,

price

revision, etc.

５％

０％

Profit improvement by shifting to mid-to-high end product strategy

(Expanding remodeling business)

[Sales ratio of remodeling products]

０

１００

[Sales of strategic products *]

* Modular kitchen systems, modular bathroom systems and floor materials

（％）

３０

４０

[Mid-to-high end product sales of whole strategic

product sales]

（％）

～～

３０

２０

Gaining effects

FY17(f) vs. FY16

Sales 370.0B yen +2.9B yen

Operating profit 16.4B yen +2.7B yen

*Based on IFRS [OP Margin] *Figures for FY17

are based on IFRS.

FY15 FY16 FY14 FY17(f) FY13

[OP Analysis] *Based on IFRS

Sales

increase

Streamlining

& Price

declines

FY14 FY15 FY16 FY17(f)

*Figures for FY17 are based on IFRS.

＋０.４

＋６.９ ‐５.４＋０.８

Fixed-cost

increase

6 large scale

BDs

(yen : billions)

(yen : billions)

24


Disclaimer Regarding Forward-Looking Statements This presentation includes forward-looking statements (that include those within the meaning of Section 27A of the U.S. Securities Act of

1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934), as amended about Panasonic and its Group companies (the Panasonic Group). Panasonic discloses its consolidated financial forecasts for fiscal 2017 based on International Financial Reporting Standards (IFRS). To the extent that statements in this presentation 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 presentation. Investors are advised to consult any further disclosures by Panasonic in its subsequent filings under the Financial Instrument and Exchange Act of Japan (the FIEA) and other publicly disclosed documents.

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 Americas, 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; the possibility that excessive currency rate fluctuations of the U.S. dollar, the euro, the Chinese yuan and other currencies against the yen may adversely affect costs and prices of Panasonic’s products and services and certain other transactions tha t are denominated in these foreign currencies; the possibility of the Panasonic Group incurring additional costs of raising funds, because of changes in the fund raising environment; the possibility of the Panasonic Group not being able 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 or incurring unexpected losses in connection with the alliances or mergers and acquisitions; the possibility of not being able to achieve its business objectives through joint ventures and other collaborative agreements with other companies, including due to the pressure of price reduction exceeding that which can be achieved by its effort and decrease in demand for products from business partners which Panasonic highly depends on in BtoB business areas; the possibility of the Panasonic Group not being able 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; the possibili ty of incurring expenses resulting from a leakage of customers’ or confidential information from Panasonic’s systems due to unauthorized access or a detection of vulnerability of network-connected products of the Panasonic Group; as well as natural disasters including earthquakes, prevalence of infectious diseases throughout the world, disruption of supply chain 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 the most recent English translated version of Panasonic’s securities reports under the FIEA and any other documents which are disclosed on its website.

In order to be consistent with generally accepted financial reporting practices in Japan, operating profit (loss) is presented in accordance

with generally accepted accounting principles in Japan. The company believes that this is useful to investors in comparing the company's financial results with those of other Japanese companies. Under United States generally accepted accounting principles, expenses associated with the implementation of early retirement programs at certain domestic and overseas companies, and impairment losses on long-lived assets are usually included as part of operating profit (loss) in the statement of income.

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