Panasonic’s 2016 profit falls as solar sales sag

Panasonic’s Eco Solutions division — which manufactures PV modules, among other products — reported a 3% year-on-year drop in sales to $13.6 billion, primarily because of lower shipments of residential PV systems in Japan. It described residential demand for solar as “weak,” although it added that the division’s earnings were also dragged down by exchange-rate losses, as the strong yen weighed on its earnings in foreign markets.

The Osaka-based company’s automotive and industrial solutions division recorded a 5% decline in sales to $22.6 billion, although its operating profit more than doubled to $964 million. The business unit’s main products include lithium-ion batteries for automotive and energy-storage use.

Panasonic President Kazuhiro Tsuga told Japanese media earlier this month that electric-vehicle batteries will be a primary growth engine for the company in the years to come. To that end, Panasonic and Tesla recently launched production of lithium-ion batteries for energy storage products and electric vehicles at the Gigafactory in the U.S. state of Nevada. In December, the two companies also announced plans to produce PV cells and modules at a facility in Buffalo, New York. And in February, it was revealed that Panasonic has started supplying 180 W solar panels and automotive prismatic lithium-ion batteries for the new 2017 Toyota Prius plug-in hybrid vehicle.

In December, Panasonic announced plans to supply PV modules to Tesla from its plant in Malaysia, in addition to opening up a shuttered production facility in Japan, according to Japanese media reports. The agreement will pave the way for Panasonic to sell its panels to Tesla/SolarCity customers in the U.S. residential market.

The company is forecasting a net profit of $1.41 billion in the current fiscal year, up 7% on the year. It expects its Eco Solutions division to post sales of $14 billion and an operating profit of $635 million over the coming year.