Panasonic Earnings: Cost Reduction Offsets IT and Industrial Weakness; Raising Fair Value 3%

Panasonic’s operating income for the June quarter was JPY 90.4 billion, up 41% from the previous year, but was actually up 9% excluding the impact of the Inflation Reduction Act on the automotive rechargeable batteries. Overall, the reported numbers were generally in line with expectations, although there were some differences in the progress toward the full-year guidance by segment. While we maintain our sales and operating income forecasts, we slightly lift Panasonic’s fair value estimate to JPY 1,700 from JPY 1,650 mainly due to some minor adjustments on nonoperating items. We maintain our view that Panasonic will continue to achieve solid growth over the next few years due to expanding sales of automotive batteries and recovering demand for electronic devices and factory automation equipment, which we believe are mostly priced in.