Panasonic cutting costs as exports hit
Daizo Ito, CEO of Panasonic Group in Thailand, practises his swing in front of a giant TV screen during a press conference on the group’s first-quarter results and strategy, at the Siam Paragon complex yesterday.
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Major consumer-products manufacturers have initiated cost-cutting measures to offset the impact of the baht appreciation, which has affected their export performance.
The Panasonic Group in Thailand yesterday announced its target to reduce overall costs 15 per cent during this fiscal year ending March 2008. CEO Daizo Ito said the strong baht, which closed at Bt34.62 to the US dollar yesterday, had affected the group's performance, where almost 70 per cent of revenues came from exports. He said the baht appreciation was among the issues seriously bothering Panasonic's parent company in Japan, together with the political uncertainty. "The baht appreciation, starting from last year, has led to the group falling short of its profit target," said Ito. He said the group posted a profit of about 8.5 per cent of total sales. "Without the baht appreciation, we expected our profit percentage to be higher by another 5 per cent," Ito said. The Panasonic Group achieved total sales of Bt67 billion in the last fiscal year ending March 2007. The group currently operates 14 factories in Thailand, 13 of which are also exporting products outside the Kingdom. Ito said the group reduced its overall costs 12-13 per cent in the last fiscal year, which helped it offset the effects of the baht appreciation without any increase in the price of exported products. Ito expected the Panasonic Group's total sales in Thailand to grow 15 per cent to Bt85 billion during the year ending March 2008. The Panasonic Group yesterday reported a 16-per-cent rise in domestic sales of audiovisual products and home appliances to Bt19.3 billion during 2006. Sales of audiovisual products, security systems and batteries accounted for Bt12.3 billion, while the rest came from electrical appliances and white-good products. The group also expected its total sales in Thailand to grow another 10 per cent to Bt21.2 billion during this fiscal year. About Bt13.5 billion of domestic sales will be from audiovisual products, security systems and batteries and another Bt7 billion from electrical home appliances like air-conditioners, refrigerators, washing machines and electric showers. For Thai Samsung Electronics, the appreciation of the baht has had its pluses and minuses. Managing director Park Kwang-kee said, "The strong baht has disadvantaged the company's exports. But our domestic sales are getting better. However, the overall result is quite okay for the company," Park said. Thai Samsung Electronics currently exports 45 per cent of its audiovisual and home-electronics products, including LCD television sets, refrigerators and washing machines, manufactured at its plant in Chon Buri's Sri Racha district. Manatase Annawat, senior manager for corporate marketing and the telecommunications business at Thai Samsung Electronics, said the company was trying to encourage economies of scale at its Sri Racha manufacturing facilities, in order to reduce costs and counter the effects of the baht appreciation. He said the move was in line with Samsung's overall strategy of consolidating its manufacturing facilities in the region, to improve economies of scale and lower costs.
Kwanchai Rungfapaisarn The Nation
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