Japanese consumer electronics giant Panasonic Corp will slash 40,000 jobs over the next two years in a bid to pare costs and keep up with ever-tougher competition from Asian rivals, a source said on Thursday.
Releasing its annual results, Panasonic declined to comment on the job cuts, which represent more than 10 percent of its 380,000 strong workforce, but set aside 110 billion yen ($1.3 billion) in restructuring expenses for the year to March 2012.
President Fumio Ohtsubo is scheduled to speak to the media about the company's future direction at 0810 GMT.
The figure is huge, but so is the company, and for an old-fashioned one like Panasonic, this is a big move, said Toru Hashizume, chief investment officer at Stats Investment Management in Tokyo.
In the mid-term, the stock is priced low, it is around the level it was after Lehman, even though the current conditions are more favorable for Panasonic, he added, referring to the collapse of Lehman Brothers in the global financial crisis.
The source who spoke to Reuters had direct knowledge of the matter, but cannot be identified because the plan has not been made public.
Once unrivalled, Japan's consumer electronic firms are facing increasing competition from cheaper Korean and Chinese producers in particular.
Panasonic said its operating profit for the fourth quarter ended March fell by almost a third to 41 billion yen. It did not give a forecast for the current year because of uncertainties following last month's devastating earthquake and tsunami in Japan.
Operating profit was 305.3 billion yen ($3.7 billion) for the year just ended, falling short of its own earlier forecast of 310 billion yen.
The figure was slightly better than a consensus of 297 billion yen, based on Thomson Reuters SmartEstimate, which places greater weight on recent estimates by highly rated analysts.
The SmartEstimate for the current year to March 2012 is for a profit fall to 260 billion yen as the company struggles with production woes and weak domestic demand following the earthquake.
Panasonic said without the impact of the quake, its forecast for this year would have been for an operating profit of 310 billion yen.
Panasonic is seeking to shift its focus to environmental and energy-related businesses such as rechargeable batteries in order to duck competition from Samsung Electronics, LG Electronics and others in consumer technology.
As part of that strategy, it announced last year it would make Panasonic Electric Works and Sanyo Electric Co wholly owned units, absorbing a combined 160,000 workers, said the Nikkei newspaper, which first reported the job cuts.
Panasonic is now seeking to shed staff in overlapping businesses, particularly abroad, it added.
The units make a wide range of products including rechargeable batteries, factory robots, electronic components, lighting and solar panels.
Shares of the electronics conglomerate closed up 2.4 percent in Tokyo, outpacing a 1.6 percent gain in the benchmark Nikkei 225 index.
Unlike their western counterparts, Japanese companies tend to avoid dumping large numbers of workers, particularly at home.
The latest staff cuts overshadow past Panasonic restructurings including 26,000 workers shed after the information-technology bubble burst, and about 15,000 in the aftermath of the Lehman shock, the paper said.
It is equal to about all the jobs lost in the United States in March according to data released by Challenger, Gray & Christmas, Inc, an outplacement firm that compiles monthly U.S. employment numbers. ($1 = 82.220 Japanese Yen)
(Additional reporting by Arpita Mukherjee in Bangalore and Isabel Reynolds, Nathan Layne, James Topham and Tim Kelly in Tokyo; Editing by Lincoln Feast and Vinu Pilakkott)