This presentation contains the business policy of Eco … · · 2018-04-04This presentation contains the business policy of Eco Solutions Company. ... Group to promote the expansion

Copyright (C) 2016 Panasonic Corporation All Rights Reserved.

This presentation contains the business policy of Eco Solutions

Company.


The results for FY2016.


In FY2016, both sales and profit decreased. The sales were

1,610.8 billion yen, minus 3% year-on-year. The operating profit

was 78.4 billion yen, which decreased by 16.9 billion yen year-on-

year. The operating profit margin was 4.9%.


The sales decreased by 48.9 billion yen, due to a sharp drop in

domestic solar sales in the residential market and a slower

recovery in the domestic housing market than expected.

There was also a negative impact of 22.5 billion yen from price

declines mainly in lighting and solar.

Sales decreased by 55.2 billion yen, mainly due to the big

impact of the domestic sales decline in solar, although the

domestic sales of LED lighting, and the overseas sales of wiring

equipment, ventilation systems, as well as ceiling fans, expanded.

The operating profit decreased by16.9 billion yen. Measures,

such as an overseas sales increase and streamlining could not

offset the impact of the domestic sales decrease of 17.3 billion

yen and profit deterioration of 10.5 billion yen due to the weak yen.


Here is the impact of the PV power generation system business

(solar business), which faced a significant change.

Other businesses excluding the solar business achieved a sales

increase year-on-year.


In the domestic residential solar market, a sales decline in terms

of volume and unit price continued, and the market size in terms

of value in FY2016 become almost half compared to that of

FY2013.

On the other hand, our sales remained at a decrease of about

25% compared to FY2013, due to increased market share with

the PV "HIT" and initiatives to control unit price decline.

We managed to secure more than 5% operating margin from

various cost reductions, although the operating profit decreased

due to a sharp sales decline compared to FY2015


From our six large scale business divisions, these are the results

for ES.

By steadily incorporating LED demand with a focus on non-

residential LED, the Lighting Business Division achieved

increased sales and profit.

Despite decreased sales year-on-year due to a struggle in a

popular priced segment, the Housing Systems Business Division

achieved increased profits by shifting to mid- and high-end

products, as well as from the effects of restructuring and

reorganization efforts which took place until FY15.


This is the business portfolio of our four business divisions

between FY2013, which is the year ES was established, and

FY2016, with sales shown on the horizontal axis and operating

profit margin on the vertical axis.

The size of the circles represents the amount of operating profit.

As you can see, the Lighting Business Division, the Energy

Systems Business Division and Panasonic Ecology Systems Co.,

Ltd. all achieved sales growth with profits.

Despite achieving profit growth, the Housing Systems Business

Division faced an issue with sales growth.


Growth strategy towards FY2019 and beyond.


We have revised ES' sales goals for FY2019 to 2.3 trillion yen.

This consists of 1.6 trillion yen for residential-related business,

including PanaHome, and 700 billion yen for non-residential-

related business.

This was revised due to three factors: changes in the domestic

market for the PV power generation system business; a review of

the timing in which PanaHome can achieve its targets (such as

for overseas businesses); and an exclusion of increased sales

through noncontiguous growth, including M&A.

We will aim for an operating profit margin of 6.0% for FY2019.


This is a strategic framework.

The sales increase amounts shown are the totals for the Group.

For the residential-related business we will proceed as a Group,

in collaboration with PanaHome, with five growth strategies.

For the non-residential-related business, we will pursue growth

with a focus on the roll-out of our LED solution business and

engineering business.

In particular, we will make investments primarily in the remodeling

business, elderly care (Age Free) business and overseas

residential-related business, and the LED solutions business for

the non-residential category.


The business policy for FY2017.


The market environment surrounding us in FY2017.

As you know, we expect a year-on-year growth of 1% in Japan,

and a year-one-year growth of 6% in the priority regions overseas.

This does not include the effects from the consumption tax hike.


Under this market environment, we will see an increase in both

sales and profits in FY2017.

We have set a sales goal of 1,640 billion yen, a 3% increase year-

on-year.

We are aiming for an operating profit of 90 billion yen, which is

13.7 billion yen more than the previous year, and a 5.5%

operating profit margin.

Although it is assumed that competitive market conditions in the

domestic solar business will continue, we intend to realize sales

growth with profits primarily in growing markets, such as the

remodeling and senior markets.


The Sales and OP Analysis.

For the domestic market we are aiming to increase sales from a

growth in the remodeling and elderly care business, as well as

from a market share increase in LED lighting.

For the overseas market we are aiming for an additional sales

increase in market share in wiring equipment, an expansion of

LED lighting in the ASEAN region, India and Turkey, as well as an

increase in sales in North America with a focus on ventilation

systems .

With regard to operating profit, despite the increased in fixed

costs from upfront investments in growing businesses, we are

aiming for a profit growth of 13.7 billion yen from streamlining

which surpasses domestic and overseas price declines, and from

an increase in sales and profits.


These are the strategic sales goals for Eco Solutions Company.

We are aiming for increased sales of 30 billion yen in the

residential-related business, with a focus on the expansion of the

remodeling business and elderly care business, and for the non-

residential-related business, we are aiming to increase sales by

about 20 billion yen from a growth in the LED solutions business

and engineering business.


The key strategies of the residential-related business.

The first key strategy for the residential-related business is the Remodeling Business.

The target for FY2017 is 255.9 billion yen, +7% year-on-year.

Panasonic Home Renovation Co., Ltd. was established in April 2016, consolidating

remodeling business brands into Panasonic Reform.

We will work on the expansion of the remodeling business by bringing together the

strength of the group, in collaboration with brand licensed stores, building products chain

stores, local electrical appliance stores and elderly care shops.

In order to do that, we will actively make various upfront investments.

In terms of products, in addition to the strengthening of our lineup of mid-to-high end

products, we will proceed with the creation and realization of "living space value" as part

of our Cross-Value innovation plan.

Through an increase in design staff at Panasonic Home Renovation Co., Ltd. and a

strengthening in collaboration with our broad range of construction networks, we will be

able to respond more effectively to a wide range of customer needs specific to home

remodeling.

Also, in order to improve the contact we have with customers, four new Living Showrooms

will be opened.

Panasonic Home Renovation will newly open 50 directly managed shops, making a total

of 70 sites.

The Panasonic Reform Club, an organization consisting of building contractors and

renovation stores (brand licensed stores), will have 400 shops which will enable the whole

Group to promote the expansion of customer friendly remodeling contacts.

In order to strengthen the horizontal function of the policies within the Group, we will carry

out consistent remodeling business policies by setting up a Panasonic Home Renovation

Division inside ES and providing both strategic and IT support.


The creation and realization of Living Space Value.

Panasonic is a unique company which has both "infill", which

includes building equipment/materials, electrical construction

materials and consumer electronics, and "skeleton" which

includes construction materials, exterior materials and the actual

houses

By mixing know-how of proposals/design/construction, we will aim

to realize a new Living Space Value that only Panasonic can

create, and deliver it to our customers.

As a part of this we established the Living Space Lab, which

demonstrates Living Space Value, at the Panasonic Center Tokyo

in April.


The second key strategy is the expansion of the Age Free Business,

which is a generic term for our domestic elderly care businesses.

We did some preparation for its growth in FY2016.

We will aim for 37 billion yen, 25% growth year-on-year, in FY2017.

For the purpose of integrating management resources, the previous ‘four

company structure by service’ was re-organized into a single company

structure, Panasonic Age-Free Co., Ltd., in April 2016.

The elderly care services and elderly housing with support services

business will continue to focus on new site expansion.

In FY2017, the establishment of 30 elderly care service sites with short-

stay, adding to the existing 125 in-home care service sites, is planned.

Also the establishment of 20 Elderly Housing units with support services

is scheduled, making a total number of 45.

Regarding the improvement of the labor environment for nursing care

staff, which is an issue in this business field, we will make an improved

environment and try to improve customer services by effectively utilizing

Panasonic's IoT/ICT technology.

Moreover, we will try to improve the retention rate by enhancing human

resources development and training.

We will aim to expand the business by providing quality service, which is

most important in the care business, and by providing customers with

confidence in the Panasonic brand.


The third key strategy is the expansion of the residential energy

management business.

This business will be expanded to 103.5 billion yen, a growth of 6%

year-on-year, in FY2017.

The PV power generation system business will "maximize profits by

fully utilizing the existing operational resources“ in spite of continued

competitive market conditions.

We will try to increase our share in the domestic residential market

by adding product line for each market segment.

We will harvest fruits from our investments in streaming/increases in

the production of panels last year, in addition to pursuing further

streamlining.

Smart HEMS will be further strengthened with a highlight on total

energy management, including solar power and storage batteries,

and the structure of ZEH corresponding proposals. Additionally, we

will proceed with reviewing family monitoring services and new

service applications corresponding to electric power deregulation.


Now, the last key strategy of the residential-related business is

with regard to our overseas business.

We are aiming at 162.5 billion yen, a 9% year-on-year real growth,

excluding the effects of exchange rates.

For ASEAN, India and Turkey, we will accelerate expansion of

new developments, such as LED lighting, while increasing share

further in the already dominant wiring devices market.

In ASEAN, we aim to collaborate with PanaHome's housing

business as well as introduce housing facilities adapted to the

local climate and life style.

With regard to North America, a newly established production

base in Mexico for ventilation systems will be fully operational

from October. This “made in market" system will accelerate our

growth strategy.


I will move onto the growth strategies for the non-residential

related business.

The first key strategy is the expansion of the LED solution

business.

We will expand this to 258.8 billion yen, a growth of 5% year-on-

year.

We already have a no. 1 market share in the non-residential

market, and will steadily increase this share in FY2016 also.

In FY2017 we will reinforce the professional proposal teams to

about 200 staff at the sales front as well as try to strengthen

development initiatives by market.

For overseas, as an additional growth engine, we will accelerate

development in China, Indonesia and India.


Next, the Engineering Business.

Aiming at 132.6 billion yen, a growth of 7% year-on-year, we will

accelerate "challenges in new areas" in addition to the expansion

of the domestic engineering business, which will continue to serve

as a base.

In the environmental engineering business, the chemical recycling

business will be expanded full-scale.

Also we shall enter the livestock industry, engaging in the

construction of facilities/building and sales of devices/equipment

for dairy/poultry.

Overseas we will aim for further growth of the PV solution

business in North America.


Finally, I will explain about the Lighting Business Division and the

Housing Systems Business Division, belonging to the six large

scale business divisions.

First, the Lighting Business Division.

The Lighting Business Division's operating margin for FY2016

was 6.3%.

We are aiming for 338.8 billion yen sales and 7.2% operating

margin for this business division by focusing on the non-

residential category as well as incorporating LED demand.


Next, the Housing Systems Business Division.

In FY2016, although sales were unachieved the previous year, we

achieved an operating margin of 4.0%.

By a further strengthening of remodeling products and the Living

Space Value initiative, this business division will work primarily on

accelerating the expansion of the remodeling business, which is

more profitable than the construction of new builds.

In FY2017, this business division will aim at 370 billion yen sales

and 16.4 billion yen operating profit, while incorporating the

impact from restructuring.


Thank you for your cooperation.


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This presentation contains the business policy of Eco … · · 2018-04-04This presentation contains the business policy of Eco Solutions Company. ... Group to promote the expansion