0 Business Transformation December 5, 2013 Panasonic Corporation Kazuhiro Tsuga Notes: 1. This is an English translation from the original presentation in Japanese. 2. In this presentation, fiscal 2014 or FY2014 refers to the year ending March 31, 2014. Measures Taken So Far 1 Reorganized corporate structure FY2013 - In the red for 2 consecutive years - Funding risk - No dividend Head Office reform, introduction of Business Divisions & Divisional Companies Unprofitable businesses Set guidelines for major unprofitable businesses & reform Reviewed transferring businesses / growth strategy Formulated and started new mid-term plan CV2015 Escaping from financial crisis Group-wide activity to generate cash Copyright (C) 2013 Panasonic Corporation All Rights Reserved. 1
Introduce Business Division System (Effective April 1) 2 Each business division has responsibility for - global R&D, production and sales - sustainable increase in cash and profit 9 business domains 88 BUs 49 BDs * Basic management unit 4 Divisional Companies support Business Divisions *as of April 2013 AP Appliances ES Eco Solutions AVC AVC Networks AIS Automotive & Industrial Systems Roadmap toward FY2016 FY2014 FY2015 FY2016 (yen: billions) 3 Operating profit 250 Net income attributable to Panasonic Corporation 50 Resumption of dividend Operating profit 350 5% Eliminate unprofitable businesses Restructuring Complete in 2 years Each BD: Improve profitability towards 5% FCF: 600 billion yen (accumulating total in FY14-16) Copyright (C) 2013 Panasonic Corporation All Rights Reserved. 2
Action Items in CV2015 4 FY14 2H As soon as possible eliminate unprofitable businesses Restructure unprofitable businesses Simultaneously concrete plan for future Develop strategy for future growth Eliminate Unprofitable Businesses 5 FY14-16 Operating loss: improve 130 billion yen TV/Panel Semiconductor Mobile phone Circuit board Optical drive/pickup - Termination of PDP business - TV business reform in US and China - Shift application usage to automotive/industrial areas - Promote asset compression - Discontinue BtoC smartphone development - Shift technology resources to other areas - Termination of the ALIVH *1 and ISB *2 businesses *1: Any Layer Interstitial Via Hole *2: Integrated System in Board - Complete domestic integration - Expand OEM Take measures against new challenges (Air conditioner, DSC) Copyright (C) 2013 Panasonic Corporation All Rights Reserved. 3
TV/Panel 6 PDP business FY14 Operating loss: 20 bil. yen Discontinue panel production at end of December 2013 1* US/China business FY14 Operating loss: 8 bil. yen US/China: Narrow down sales channels US: Introduce factory direct business model 2* Exit business by March 2014 Largely reduce operation cost Expect to return to black in FY16 Notes 1*: Forecast for Panasonic Plasma Display 2*: Forecast for local production and sales consolidation basis Action Items in CV2015 7 FY14 2H As soon as possible eliminate unprofitable businesses Restructure unprofitable businesses Simultaneously concrete plan for future Develop strategy for future growth Copyright (C) 2013 Panasonic Corporation All Rights Reserved. 4
Panasonic in Future 8 Offer better life to customers, partnering with industry ES Logistics Retail Public AVC AP Residence Industry Your Home Beauty Healthcare Cloud Your Community Your Business Electronics Your Journey Aviation Your Car Cloud AIS Auto Automotive: 2 Trillion Yen Business 9 Expand business with computerization and electrification (yen: trillions) AIS* leading strategic planning Unconventional measure M&A/business alliance in safety/security area Cloud Expand sales more than 10 times per car 1.0 FY13 1.7 FY19(e) Business expansion - Electrification (battery) - Computerization (sensor, camera, display) - Business as Tier 1 Note*: Automotive & Industrial Systems Company Copyright (C) 2013 Panasonic Corporation All Rights Reserved. 5
Automotive Battery: CAPEX Receive orders from 5 auto manufacturers for more than 10 models 10 For Tesla Motors: Supply 2 billion cells in 2014-17 Tesla Model S Utilize existing/unused facilities Expand business with partners Housing: 2 Trillion Yen Business 11 More business opportunity with energy revolution (yen: trillions) ES* leading strategic planning Cloud HEMS Double sales per house 1.1 FY13 1.7 FY19(e) Unconventional measure M&A/business alliance in new area and overseas sales channel Business expansion -HEMS - Home remodeling - Asia, China, India Note*: Eco Solutions Company Copyright (C) 2013 Panasonic Corporation All Rights Reserved. 6
HEMS 12 Power conditioner Energy Creation-storage AiSEG Peripheral equipment Charger for EV 'Smartmeter' FY14 1H Sales: 29 bil. yen (+11% vs FY13) Smart house CASART ECO CORDIS Smart power distribution board will be introduced in 2014 Smart Cosmo Strong orders FY14 1H 500 houses (FY14 full year forecast: 1,000 houses) Developed through our integrated strength Buyout ViKO: Turkish Wiring Device Maker 13 High market share in Middle East, CIS No. 1 market share in Asia FY14 Sales forecast: 15 bil. yen Employees: approx. 700 Business: in 79 countries Purchase price: 46 bil. yen (Acquire 90% shares) Accelerate business expansion through new sales channels Copyright (C) 2013 Panasonic Corporation All Rights Reserved. 7
Towards 2018 14 (yen: trillions) Sales 7.3 BtoB (excl. housing/auto) 3.4 1.0 1.1 1.9 Operating Profit Margin 5% 2.0 2.0 2.0 Auto Housing Consumer electronics FY13 FY16(e) FY19(e) 15 Copyright (C) 2013 Panasonic Corporation All Rights Reserved. 8