Panasonic Malaysia To Discontinue More Home Appliances

During an earnings call with MIDF recently, Panasonic Malaysia that after it discontinued offering rice cooker products early this year the group plans to terminate its kitchen appliances (for blender, food processor, and slow cooker), with effect from 30 September 2022.

Panasonic has blamed the rising commodity prices that have risen substantially since 2021 and are still trending high, namely ABS, copper, aluminum, and steel on the tough decision. The group raised the selling prices of a few models from the Heating, Ventilation, and Air conditioning division (HVAC) by roughly 5–10% to mitigate the impact of rising input costs.

The research house gathers that a combined 13% of PMM’s sales are contributed by both rice cookers (6%) and kitchen appliances (7%). It had said that rice cooker products were discontinued mostly because they had not been profitable in recent years due to rising material costs. Some of the kitchen appliances products will be terminated due to the realignment of global production for the Panasonic group. The management at PMM expects 50% increase in restructuring capital expenditures in FY23F for the discontinued products divisions.

Looking forward, Panasonic intended to expand product lines-up for its existing core business, namely home shower, vacuum
cleaner, and fan (ceiling fan, electric fan, and ventilating fan). The group is in discussion with Japan’s business division
about developing a new product line for water-based businesses. However, MIDF opines the new addition will not have a material impact on the group’s mid-term earnings as it typically takes at least 3 years to be profitable after the product is launched.

MIDF maintains a SELL on Panasonic shared with a revised target price of RM22.75 (previously RM23.28) after rolling forward of the valuation year.

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