Annual Report
2018
Financial and Non Financial Results
for the year ended March 31, 2018
Takeoff for the Next 100 Years
Cross-Value Innovation
Panasonic draws on the advanced and specialized technologies as well as the manufacturing capabilities of its Business Divisions
in combination with the strengths of external business partners to create new value.
Appliances Company
Eco Solutions Company
Connected
Solutions Company
Automotive &
Industrial Systems Company
• Air-Conditioner Company
• TV BD
• Imaging Network BD
• Home Entertainment BD
• Communication Products BD
• Refrigerator BD
• Laundry Systems and Vacuum
Cleaner BD
• Kitchen Appliances BD
• Beauty and Living BD
• Refrigeration and Air-Conditioning
Devices BD
• Smart Energy System BD
• Cold Chain BD
• Hussmann Corporation
Brand Slogan
• Lighting BD
• Energy Systems BD
• Panasonic Ecology Systems Co., Ltd.
• Housing Systems BD
• Panasonic Homes Co., Ltd.
• Panasonic Cycle Technology Co., Ltd.
• Panasonic Avionics Corporation
• Process Automation BD
• Media Entertainment BD
• Mobile Solutions BD
• Panasonic System Solutions Japan
Co., Ltd.
• Security Systems BD
• Automotive Infotainment Systems BD
• Automotive Electronics Systems BD
• Ficosa International, S.A.
• Energy Device BD
• Energy Solutions BD
• Tesla Energy BD
• Automotive Energy BD
• Electromechanical Control BD
• Panasonic Semiconductor Solutions
Co., Ltd.
• Device Solutions BD
• Electronic Materials BD
• Panasonic Liquid Crystal Display Co.,
Ltd.
(As of April 1, 2018)
Note: BD stands for Business Division.
Contributing to “A Better Life, A Better World”
Panasonic has contributed to the development of society through its businesses for the 100 years since its founding.
Going forward, we will continue to help realize “A Better Life, A Better World” through each of our businesses
and thereby pursue sustained growth and higher corporate value.
01
Panasonic Annual Report 2018
Introduction
Growth Strategy
Fouundadatiotioon fn foror GroGGrowthwth
Results for Fiscal Year
Ended March 2018
Business Composition Ratio (Fiscal year ended March 2018)
Net Sales Composition Ratio
by Segment
Operating Profit Composition Ratio
by Segment
Net Sales Composition Ratio
by Region
AIS 32%
AP 32%
AIS 24%
AP 28%
China 12%
Japan 47%
Consolidated
Net Sales
¥7,982.2
billion
Consolidated
Operating Profit
¥380.5
billion
Asia 14%
Europe 10%
Consolidated
Net Sales
¥7,982.2
billion
CNS 13%
ES 23%
CNS 27%
ES 21%
Americas 17%
Notes:
1. Official segment names are as follows:
AP: Appliances ES: Eco Solutions CNS: Connected Solutions AIS: Automotive & Industrial Systems
2. Net sales and operating profit of each segment are calculated in line with the organizational structure as of April 1, 2018.
Net sales and operating profit composition ratios by segment are calculated by dividing the net sales and operating profit of each segment by consolidated sales and operating profit before
adding Other and elimination and adjustments. “Other” includes business activities not belonging to the reportable segments, such as sales of raw materials.
Panasonic Annual Report 2018 02
Management Philosophy and Our Corporate History
Helping Bring About
A Better Life, A Better World Based on
Our Management Philosophy
“We will devote ourselves to the progress and
The Sustainable Development Goals (SDGs) were
development of society and the well-being of people
adopted by the United Nations in 2015, and
through our business activities, thereby enhancing
expectations in the international community have
the quality of life throughout the world.” This Basic
mounted with respect to the role of corporations in
Management Objective embodies our mission and
solving social issues.
devotion, and as the heart of our management philosophy,
Based on its management philosophy, Panasonic
it has served as the foundation for all our management
will continue to help solve social issues and contribute
activities. In overseas business development as well,
to further development in order to bring about a bright
the first principle has been to assist in each country’s
new future. We also intend to achieve sustained growth
development in a manner that is truly appreciated.
and continue to enhance corporate value.
Our History
1918
Matsushita Electric Housewares Manufacturing Works (today’s
Panasonic) established. Two new products, an attachment
plug and, a two-way socket, launched on the market.
1927
Square bicycle lamp launched
under the name “National
Lamp,” reflecting the hope that
it would become indispensable
to the nation’s citizens. The
product became popular
throughout Japan as a safe
light source.
1931
Sales of radios commenced.
This radio that “wouldn’t
break down” delighted
consumers and it brought news
and culture into people’s
homes.
1932
Trade department established and export business
commenced.
03
Panasonic Annual Report 2018
1950s
Washing machines, black
and white TVs, refrigerators
and other products launched
that reduced the burden of
housework and made life
easier.
1961
Panasonic’s first overseas
manufacturing facility,
National Thai Manufacturing
Company, established.
Manufacturing facilities were
subsequently established in
countries with difficulty importing
household appliances due to
foreign exchange shortages.
1965
Five-day work week introduced ahead of other companies.
With a slogan of “One day of study, and one day of rest,” the
change played a major role in raising employee productivity
and motivation.
Introduction
GroGrowthwt StS ratrategyegy
FouFoundandatiotion fn ffor or oro GGroGrowthwth
ResResRese ultults fs for or FisFisF calcalal YYeYeY ar ar
EndEnded ed MarMarchcchch 201201888
Panasonic’s Management Philosophy Structure
Guidance in putting
the management
philosophy into
practice:
Evolution in response
to changes in social
conditions, etc.
Panasonic Code of Conduct
(Revised and updated; current as of 2016)
https://www.panasonic.com/global/corporate/
management/code-of-conduct/list.html
Management Philosophy
Foundation of
activities of
management:
Immutable
Basic Management Objective
Recognizing our responsibilities as industrialists, we will
devote ourselves to the progress and development of society
and the well-being of people through our business activities,
thereby enhancing the quality of life throughout the world.
Company Creed
Progress and development can be realized only through the
combined efforts and cooperation of each employee of our company.
United in spirit, we pledge to perform our corporate duties with
dedication, diligence and integrity.
Seven Principles
Contribution to Society, Fairness and Honesty, Cooperation and Team Spirit,
Untiring Effort for Improvement, Courtesy and Humility, Adaptability, Gratitude
1987
Joint venture to produce
picture tubes (CRTs) for color
TVs established in Beijing
with a view to China’s
modernization. It was the
first joint venture in China for
Panasonic.
1988
Promoting world peace
through sport. In accord with
this philosophy of the Olympic
Games, Panasonic has, since
the Olympic Winter Games
Calgary 1988, supported the
Movement over 30 years as the
highest ranking sponsor in “The
Olympic Partner (TOP)” program.
2008
To make the Company a truly global corporation, the
company name was changed to “Panasonic Corporation”, and
its corporate brands were unified as “Panasonic” worldwide.
Founder Konosuke Matsushita
2010
Mass production of
lithium-ion batteries for hybrid
EV automobiles commenced,
helping to popularize
eco-cars.
2011
To promote rapid decision-making and maximize group
synergies, Panasonic Electric Works Co., Ltd. and SANYO
Electric Co., Ltd. were made wholly owned subsidiaries. Fields
for contribution were expanded.
2014
Fujisawa Sustainable Smart
Town established for
eco-conscious and
comfortable lifestyles while
ensuring safety and
security.
Panasonic Annual Report 2018 04
Contents / Editorial Policy
Introduction
Growth Strategy
03
05
09
Management Philosophy and
Our Corporate History
Contents / Editorial Policy
07
Financial / ESG Highlights
Message from the CEO
29
Message from the CSO and CFO
15
15
17
19
Medium-to-Long Term
Business Overview
Looking Back on the Period from Fiscal 2013
Fiscal 2018 Results / Fiscal 2019 Outlook
Strategic Investments for Medium-to-Long
Term Growth
21
Message from the CTO
Foundation
for Growth
49
Message from the Chairman of
the Board
51
Outside Directors’ Roundtable
Discussion
57
81
83
Directors, Audit & Supervisory
Board Members and Executive
Officers
10-Year Financial Summary
Financial Review
35
35
37
39
41
43
47
63
63
68
69
70
71
71
73
74
75
75
76
77
79
91
95
Divisional Company Strategies
Overview of Divisional Companies and
Strategies by Business
Appliances Company
Eco Solutions Company
Connected Solutions Company
Automotive & Industrial Systems Company
Main Products and Services by Business
Division
Governance
Corporate Governance Structure
and Initiatives
Risk Management
Compliance
CSR Management
Social Initiatives
Human Resources Development
and Diversity
Respect for Human Rights /
Supply Chain Management
Raising Quality Levels and
Ensuring Product Safety
Environmental Initiatives
Basic Policy
Organizational Structure /
Eco-conscious Products
Initiatives to Address
Environmental Challenges
Examples of Initiatives Aimed
at Addressing Social Issues
(Relationship with SDGs)
Consolidated Financial Statements
Corporate Data
Results
for Fiscal Year Ended
March 2018
05
Panasonic Annual Report 2018
Note: For details regarding business and other risks, please refer to the Company’s Annual Securities Report (Yukashoken Hokokusho)
Introduction
Growth Strategy
Foundation for Growth
Results for Fiscal Year
Ended March 2018
Editorial Policy
Thank you for reading Panasonic’s Annual Report 2018. Panasonic positions its Annual Report as an integrated report
incorporating management strategies for medium-to-long term growth, environmental, social and governance (ESG) systems
and initiatives that provide a foundation for growth, and operating results, financial position and other information for the fiscal
year ended March 2018. It is published primarily for investors.
Panasonic in 2018 is celebrating its 100th anniversary. This year’s report conveys the Company’s strategy for continuing to
innovate and grow further over the medium-to-long term by leveraging the strengths it has cultivated to date. Specifically, the
Message from the CEO introduces issues, strategies going forward, and the direction of new business areas that Panasonic
intends to develop as it takes off for its next 100 years. The Message from the CTO introduces technological and manufacturing
capabilities cultivated over the past 100 years and initiatives for accelerating innovation. The Message from the CSO and CFO
presents the Company’s thinking on business portfolio management and investment and financial discipline for increasing
medium-to-long term growth and profitability. Information has also been enhanced on strengthening governance, which is a
foundation for growth. We hope that readers will deepen their understanding of Panasonic’s governance through the Message
from the Chairman of the Board and Outside Directors’ Roundtable Discussion.
Panasonic will continue actively conducting dialogue with investors and work to faithfully utilize feedback received in its
management with the goal of sustained growth and enhanced corporate value. Thank you for your further understanding and
support for the Company.
August 2018
Corporate Finance & Investor Relations Department
Corporate Strategy Division
Recognition from Outside the Company (Fiscal Year Ended March 2018)
Panasonic has been selected as a component of the FTSE4Good Index, the global socially responsible investment index, for the 18th
consecutive year. Furthermore, it has been selected as part of the MSCI ESG Leaders Indexes (formerly the MSCI Global Sustainability
Indexes), the global ESG investment index, for the 8th consecutive year. Panasonic has also received an A- in the CDP 2017 rankings.
The second-highest level of an eight-tier ranking system, this CDP ranking is a measure of the initiatives and comprehensiveness of
information disclosed related to climate change. In addition, since 2014, Panasonic has been selected as a component of the new
stock index “JPX-Nikkei Index 400”, which is composed of companies with high appeal for investors. And Panasonic has been included
in the FTSE Blossom Japan Index and MSCI Japan ESG Select Leaders Index, both of which were newly created in July 2017.
THE INCLUSION OF PANASONIC Corporation IN ANY MSCI INDEX, AND THE USE OF MSCI LOGOS, TRADEMARKS, SERVICE MARKS OR INDEX NAMES HEREIN, DO NOT CONSTITUTE A SPONSORSHIP, ENDORSEMENT
OR PROMOTION OF PANASONIC Corporation BY MSCI OR ANY OF ITS AFFILIATES. THE MSCI INDEXES ARE THE EXCLUSIVE PROPERTY OF MSCI. MSCI AND THE MSCI INDEX NAMES AND LOGOS ARE TRADEMARKS
OR SERVICE MARKS OF MSCI OR ITS AFFILIATES.
Disclaimer Regarding Forward-Looking Statements
This Annual Report includes forward-looking statements (that include those within the meaning of Section 27A of the U.S. Securities Act of 1933, as
amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended) about Panasonic and its Group companies (the Panasonic Group).
To the extent that statements in this Annual Report do not relate to historical or current facts, they constitute forward-looking statements. These
forward-looking statements are based on the current assumptions and beliefs of the Panasonic Group in light of the information currently available to it,
and involve known and unknown risks, uncertainties and other factors. Such risks, uncertainties and other factors may cause the Panasonic Group’s
actual results, performance, achievements or financial position to be materially different from any future results, performance, achievements or financial
position expressed or implied by these forward-looking statements. Panasonic undertakes no obligation to publicly update any forward-looking statements
after the date of this Annual Report. Investors are advised to consult any further disclosures by Panasonic in its subsequent filings under the Financial
Instrument and Exchange Act of Japan (the FIEA) and other publicly disclosed documents.
Such risks, uncertainties and other factors are not all-inclusive and further information is contained in the most recent English translated version of
Panasonic’s securities reports under the FIEA and any other documents which are disclosed on its website.
Panasonic Annual Report 2018 06
Financial / ESG Highlights
Panasonic Corporation and Subsidiaries, Years ended March 31
Panasonic began applying International Financial Reporting Standards (IFRS) on a voluntary basis in the fiscal year ended March 2017.
Financial figures for the fiscal year ended March 2016 are also presented in accordance with IFRS in addition to conventional U.S. GAAP standards.
Please refer to notes of “10-Year Financial Summary” on pages 81 and 82.
Financial Highlights
Net Sales
(Trillions of yen)
9
6
3
0
Operating Profit and Ratio to Sales
8.0
3.7
4.3
(Billions of yen)
600
400
200
0
(%)
10.0
380.5
4.8%
7.5
5.0
2.5
0
3/’09 3/’10 3/’11 3/’12 3/’13 3/’14 3/’15 3/’16
U.S. GAAP
3/’16
3/’17 3/’18
IFRS
3/’09 3/’10 3/’11 3/’12 3/’13 3/’14 3/’15 3/’16
U.S. GAAP
3/’16
3/’17 3/’18
IFRS
Domestic
Overseas
Operating Profit (left scale)
Operating Profit/Sales Ratio (right scale)
Sales increased year-on-year due to steady sales in Japan and continued
growth in the automotive-related business including the Automotive Business
and the Energy Business.
Though impacted by sharp increases in raw material prices and higher fixed costs
for future growth, profit increased due mainly to gains from increased sales in
the Automotive Business and Industrial Business, and streamlining initiatives.
Capital Investment and Depreciation
Free Cash Flows
(Billions of yen)
(Billions of yen)
423.2
132.7
–35.6
–458.8
3/’09 3/’10 3/’11 3/’12 3/’13 3/’14 3/’15 3/’16 3/’16 3/’17 3/’18
U.S. GAAP
IFRS
Cash Flow from Operating Activities
Free Cash Flow
Free Cash Flow Excluding Strategic Investments
Cash Flow from Investing Activities
Free cash flow was negative due to continued strategic investment in growth
fields. Excluding strategic investment, cash flow was 132.7 billion yen, a decrease
from the previous year. This was due mainly to an increase in working capital
requirements in connection with higher sales.
500
400
300
200
100
0
392.2
226.6
600
400
200
0
–200
–400
–600
3/’09 3/’10 3/’11 3/’12 3/’13 3/’14 3/’15 3/’16 3/’16
U.S. GAAP
Capital Investment
Depreciation
3/’17 3/’18
IFRS
Capital investment increased year-on-year due mainly to continued active
investment in production facilities for automotive batteries, a growth field.
ESG Highlights
Size of Contribution in Reducing CO2 Emissions through
Products and Services
(Million tons)
80
60
40
20
0
CO2 Emissions in Production Activities and CO2
Emissions per Basic Unit
(Million tons)
5
86.0%
2.28
(%)
100
75
50
25
0
60.97
17.10
43.87
4
3
2
1
0
3/’14
3/’15
3/’16
3/’17
3/’18
3/’14
3/’15
3/’16
3/’17
3/’18
Size of direct contribution in reducing CO2 emissions
Size of indirect contribution in reducing CO2 emissions
CO2 emissions (left scale)
CO2 emissions per basic unit (compared to the fiscal year ended March 2014)
(right scale)
Panasonic works to maximize contributions to CO2 emission reductions through
improving the energy-saving performance of products and services. In fiscal
2018, contributions to CO2 reductions increased to 60.97 million tons due to
increased sales of air-conditioners in China and other factors.
Please refer to “CO2 Reduction” on page 77.
At its factories and other facilities, Panasonic promotes energy-saving
activities, the utilization of renewable energies, and other initiatives. In fiscal
2018, CO2 emissions per basic unit of production activities were reduced by 14%
compared to the fiscal year ended March 2014.
Please refer to “CO2 Reduction” on page 77.
07
Panasonic Annual Report 2018
Introduction
Foundation for Growth
Results for Fiscal Year
Ended March 2018
Net Profit Attributable to Panasonic Corporation
Stockholders and ROE
R&D Expenditures and R&D Expenditures to Sales Ratio
(Billions of yen)
300
0
–300
–600
–900
14.4%
(%)
16.0
236.0
0
–16.0
–32.0
–48.0
(Billions of yen)
600
400
200
0
448.9
5.6%
(%)
7.5
5.0
2.5
0
3/’09 3/’10 3/’11 3/’12 3/’13 3/’14 3/’15 3/’16 3/’16 3/’17 3/’18
U.S. GAAP
IFRS
3/’09 3/’10 3/’11 3/’12 3/’13 3/’14 3/’15 3/’16
U.S. GAAP
3/’16 3/’17 3/’18
IFRS
Net Profit Attributable to Panasonic Corporation Stockholders (left scale)
ROE (right scale)
R&D Expenditures (left scale)
R&D Expenditure to Sales ratio (right scale)
Net profit attributable to Panasonic Corporation stockholders increased due
to higher operating profit and improvement in the effective tax rate. As a result,
ROE improved by 4.5 percentage points from the previous year, to 14.4%.
Panasonic focused on development of new technologies and new products
based on growth strategies for key areas. The Company also actively engaged
in new business creation. R&D expenditures as a result were 448.9 billion yen.
Interest-Bearing Debt and Cash and Cash Equivalents
Dividends Declared per Share and Payout Ratio
(Billions of yen)
2,000
1,500
1,000
500
0
1,239.4
1,089.6
(Yen)
40.0
30.0
20.0
10.0
0
30.0
(%)
60.0
45.0
30.0
29.6%
15.0
0
3/’09 3/’10 3/’11 3/’12 3/’13 3/’14 3/’15 3/’16 3/’16 3/’17 3/’18
3/’09 3/’10 3/’11 3/’12 3/’13 3/’14 3/’15 3/’16 3/’16 3/’17 3/’18
U.S. GAAP
IFRS
U.S. GAAP
IFRS
Interest-Bearing Debt
Cash and Cash Equivalents
Dividends Declared per Share (left scale)
Payout Ratio (right scale)
Interest-bearing debt increased due to the issue of short-term corporate bonds
and other factors. Cash and cash equivalents decreased from the previous year
due mainly to strategic investment, an increase in working capital requirements
in connection with higher sales.
Panasonic works to provide a stable, sustained dividend based on a target
consolidated payout ratio of approximately 30%. In line with this policy,
the Company paid an annual dividend per share in fiscal 2018 of 30 yen, an
increase of 5 yen from the previous year.
Note: The dividend payout ratio is not calculated in fiscal years when net income attributable
to Panasonic Corporation is negative.
Number of Women in Managerial Positions / Percentage
of Women in Positions of Responsibility
(Persons)
600
7.2%
(%)
7.5
493
5.0
2.5
0
400
200
0
4/’14
4/’15
4/’16
4/’17
4/’18
(As of April 30 of each year)
Number of Women in Managerial Positions (left scale)
Percentage of Women in Positions of Responsibility (right scale)
Note: Managerial position is defined as section leader or higher. Positions of responsibility include positions
such as chief or assistant chief. Total of Panasonic Corporation and its key domestic Group companies.
Promoting diversity is an important management initiative, and in Japan in
particular, the hiring of more women to positions with decision-making authority
is recognized as necessary. Panasonic continues every year to increase the
number of women in managerial positions and percentage of women in positions
of responsibility through the promotion of various initiatives.
Please refer to “Human Resources Development and Diversity” on page 71.
Number of Board Members / Outside Director Ratio
(Persons)
20
15
10
5
0
33.3%
4
8
(%)
35
30
25
20
15
10
5
0
6/’14
6/’15
6/’16
Outside Directors (left scale)
Inside Directors (left scale)
Ratio of Outside Directors (right scale)
6/’17
6/’18
(As of June 30 of each year)
The composition of the Board of Directors was changed substantially in fiscal
2017 to further strengthen corporate governance. As of June 30, 2018, the
number of directors sets at 12 and the outside director ratio at one-third.
Please refer to “Governance” on page 63.
Panasonic Annual Report 2018 08
Message from the CEO
Kazuhiro
Tsuga
Representative Director
President
CEO
09
Panasonic Annual Report 2018
Growth Strategy
Foundation for Growth
Results for Fiscal Year
Ended March 2018
Pushing Forward for
Sustainable Growth
through Ceaseless New Contributions
In fiscal 2018, Panasonic achieved
increases in both sales and profit.
What needs to be changed for future
growth and your view on future strategy?
A solid foundation for sustainable
growth near completion;
promoting a growth strategy for
further improvement in profitability
After becoming president, I initiated a series
of steps to prepare for future growth. These
steps included investing in growth areas and
shifting our resources while carrying out
structural reform and profitability improvement
initiatives. As a result, Panasonic was able to
achieve growth in both sales and profit in fiscal
2018. Sales and profit increases, in real terms
excluding the effect of exchange rates, were
accomplished for the first time in seven years.
I regard this as a major turning point. In addition
to our financial performance, I place emphasis
on whether a certain business can continue to
generate value and avoid becoming obsolete.
We have definitely made improvements from
each perspective, and I am quite confident of
our outlook.
However, the current status shows us that
we have just turned things around. Accordingly,
we must work harder to improve profitability
even further. We will steadily gain the full-fledged
investment returns coming from our growing
businesses, while continuing to pursue
profitability improvements for our businesses
still showing low profits. Furthermore, to
achieve growth accompanied with profitability,
we will conduct thorough business portfolio
management including the shift of resources
and replacement of businesses. In fiscal 2019,
we are expecting another year of sales and
profit growth, but will continue to take
necessary measures toward achieving
sustainable growth.
Net Sales / Operating Profit
3/’16
3/’18
3/’15
3/’19
(Forecast)
Sales &
profit growth
3/’17
3/’14
Sales decline &
profit growth
3/’13
*
t
i
f
o
r
p
g
n
i
t
a
r
e
p
O
Sales in real terms
(from fiscal year ended March 2013, excluding effect of exchange rates)
* Fiscal years after FY2017: OP based on IFRS deducting other income/loss
Panasonic Annual Report 2018 10
Message from the CEO
Ongoing change through
a “champion and challenger” model
Panasonic celebrates its 100th anniversary in
2018. Going forward, we will maintain our
efforts to pursue growth along with our brand
slogan, “A Better Life, A Better World.” This
encapsulates our vision of expanding a better
life and realizing a better world globally for
each individual customer, based on our
philosophy of “contributing to the development
of society through our business activities.”
While this fundamental vision and philosophy
will never change, 2018 allows us to make a
Free from the past to
achieve innovation
fresh start, taking off for the next 100 years.
Panasonic’s development rests on its
continuous contributions to society, offering a
variety of electrical products based on a
“mass-production, volume-sales” approach.
Over the years, we have refined our strengths
in technology and manufacturing, built
relationships of trust with our customers, and
cultivated our brand power. Having said this,
we now understand that the changes in
society are so significant that we are facing
limits to implementing this business model of
“mass-production and volume-sales,” in which
we have been able to exert our strengths.
Looking at the consumer business, various
products are already widespread. The change
in people’s mindsets, finding less value in
simply possessing tangible products, has led
to the dawn of new markets such as car-sharing.
These changes in society will accelerate
through the advancements of digital technology
11
Panasonic Annual Report 2018
Growth Strategy
Foundation for Growth
Results for Fiscal Year
Ended March 2018
including IoT and AI.
Amid these significant changes, the question
arises whether Panasonic, a large 100-year-old
company, will be able to respond flexibly and
grow sustainably. To do this, the basic idea is
to implement a “Champion and Challenger”
model. At Panasonic, there are many champion
businesses such as the consumer electronics
and electrical construction materials
businesses in Japan. But champions cannot
be champions forever. Even if a certain
business is performing favorably today,
forecast of a scale-down in the future will
necessitate changes be made. At the same
time, it is imperative that we possess various
challenger businesses in areas like automotive
batteries so we can develop based on a sound
balance of champions and challengers. Our
champion businesses should pursue further
profitability to support challenger businesses
in terms of technological development,
funding and resources. And our challenger
businesses should free themselves from
conventional businesses’ assets and systems
to achieve innovation, while placing a priority
on speed.
What new business are you planning to
pursue as a challenger?
Refine our “No. 1 automotive
batteries” for future profit. New
endeavors in the mobility business
First is the automotive business. We will
secure further progress in refining
performance of our “global No. 1 batteries.”
Panasonic has a history of over 50 years in
the storage battery business. We have an
accumulated track record of technological
and manufacturing competitiveness, in
addition to expertise in the chemistry of
materials, which in turn serve to decisively
determine the quality of a battery. On this
basis, we can continue to differentiate
ourselves, and leverage this differentiation as
a source of competitiveness. Based on this
competitive advantage, our business strategy
is to achieve mutual development through
strong partnerships with our customers such
Explore a new mobility
business by leveraging
strengths in
automotive batteries
as Tesla and Toyota, while pursuing further
sophistication of battery features. These
initiatives enable us to seek growth and
assure profitability.
Looking beyond our status as a battery
maker, we will also refine our way of
efficiently using batteries, going forward. This
means we can leverage our strengths in
automotive batteries through battery
management and the collection of data. For
this endeavor, we will mainly focus on the
Chinese market which is facing a wide range
of social issues related to the environment and
energy through rapid economic development
and urbanization. The Chinese market offers
considerable growth potential, given
developments in electrification not only for
passenger and commercial vehicles, but also
for special-use, super-compact EVs used for
delivery and other purposes. I am keen to
take up the challenge of exploring a new
mobility business and creating contributions
together with our partner companies.
Consumer electronics evolving with
IoT; expanding contributions from
“electrical goods” to “living”
Second is the consumer electronics and
housing-related business. We will first take
up the challenge in the Chinese market and
offer a lifestyle that people yearn for. In
specific terms, we are targeting the newly
emerging affluent demographic. Typical
customers are married couples in the young
age bracket with a high family income, a
fondness for new trends, and the capability to
disseminate information. We will engage in
product development and marketing activities
based on our study of what elements will
drive their desires. We will also respond to
Chinese market demand by offering added
value through the networking of consumer
Panasonic Annual Report 2018 12
Message from the CEO
electronics and connection with services.
Recognizing that the Chinese market is
conscious of the changes taking place, we
plan to focus on this region. By embracing
such challenges, we will be able to accelerate
our evolution.
For the Japanese market, we aim to create
a unique brand image of Panasonic as a
lifestyle provider, evolving from the current
perception of the Company as a manufacturer
of consumer electronics. After cultivating
Panasonic’s brand strengths in the consumer
electronics area, PanaHome (renamed
Panasonic Homes in April 2018) became a
wholly owned subsidiary in October 2017.
We are now ready to fully leverage our
capabilities in consumer electronics, electrical
construction materials, building materials,
together with homebuilding, to make
proposals that help create new value in the
“living” field. In addition, we will expand our
areas of contribution from homes to urban
development and services in a concrete
manner that our customers can easily
recognize.
Bringing “Gemba Process Innovation”
to our enterprise customers
Finally, we are taking up the challenge in
solutions-based businesses for enterprises.
For the Connected Solutions Company,
established in April 2017, the major business
pillars are for enterprises, such as inflight
entertainment systems, mounting equipment,
projectors and payment terminals. We are
now trying to add a layer to our business to
provide solutions to solve our customers’
Refine our capabilities to
respond to changes
by placing emphasis on
the rapidly-changing
Chinese and U.S. markets
issues, aiming to improve our profitability.
Our initiatives go into what we call “Gemba
(operational frontlines) Process Innovation.”
Our main targets are customers facing issues
at their Gemba, such as the services
industry including logistics and distribution.
On the back of the networking era, the
services industry faces urgent management
issues. This includes bringing innovation to
their supply-chain for a speedy response
to diverse consumer needs as well as
innovating their products and services. The
expertise and technological capabilities
Panasonic has developed as a manufacturer
can contribute to solving our customers’
supply chain issues at the Gemba where they
manufacture, transport, and sell their
products and services.
New mid-term strategy: accelerate
innovation addressing changes in
society as endeavors take shape
Changes in the business environment will
become increasingly drastic. For Panasonic
to grow in the medium-to-long term, it is vital
for us to have keen insights into changes in
society such as urbanization, the aging
population and diversified values, in addition
to making the first move.
During this fiscal year, we will formulate
our new mid-term strategy for the three years
starting fiscal 2020. We will elaborate our
actions for the next three years, backcasting
from our medium-to-long term vision, based
on assumptions regarding changes in society
and what changes Panasonic would like to
bring about in 2030. Each of the endeavors
I mentioned earlier will also take shape under
the new mid-term strategy.
To address the significant changes in
society, it is also necessary to place oneself
in the middle of intense environmental
change. If we remain entrenched in a
Japan-centric approach, we will not be able
to respond to the rapid changes happening
globally. Our capabilities to meet such
changes will be refined by placing emphasis
on the rapidly changing Chinese and U.S.
markets, and being inspired by our
customers and business partners.
13
Panasonic Annual Report 2018
Introduction
Growth Strategy
Foundation for Growth
Results for Fiscal Year
Ended March 2018
Toward medium-to-long term growth
and enhancing corporate value
Panasonic is positioning its 100th anniversary
as a fresh start. Thinking about our aim going
forward, when society evolves and encounters
changes, new social issues emerge.
Panasonic’s raison d’être is to address these
social changes and constantly offer new
contributions that help solve such issues.
As we take off for the next 100 years, we
will continue pushing forward to achieve
medium-to-long term sustainable growth and
to enhance corporate value. Thank you for
taking an interest in our new journey. I would
like to ask for your continued support to the
endeavors taken by Panasonic.
What is your message to investors?
Further implementation of management
through collective wisdom
When making progress in taking up challenges,
it is important to have the attitude of “making
use of collective wisdom,” an approach
advocated by our founder, Konosuke
Matsushita, which is widely understood by
our employees. Being aware that there is a
limit to what one person can accomplish
alone, we will enrich deliberations from
diverse perspectives within the Company, in
addition to Board of Directors meetings
where we can draw from the insights of
outside directors. We also welcome the
objective opinions of investors, which we will
consider in our way of management.
Panasonic Annual Report 2018 14
Medium-to-Long Term Business Overview
Looking Back on the Period from Fiscal 2013
From a Decrease in Net Sales and Increase in Profits
to Increases in Both by Improving Performance and
Rebuilding Business Fields
Net Sales (Billions of yen)
Operating Profit (Billions of yen)
Net Profit (Billions of yen)
7,303.0
160.9
7,736.5
7,715.0
381.9
415.7
7,553.7
305.1
120.4
179.5
193.3
–754.3
3/2013
3/2014
3/2015
U.S. GAAP
3/2016
Cross-Value Innovation 2015 (CV2015) mid-term management plan
Large-scale business
restructuring
• Kazuhiro Tsuga appointed
as the Company’s
president
• Group Strategy Meeting
established. Put in place a
structure and systems for
using collective wisdom
and making timely decision
making
• Introduced a Business
Division system in order to
engage in autonomous
operations while visualizing
management. Established
four Divisional Companies
to support Business Division
growth and development
• Promoted four key initiatives
1. Eliminate unprofitable
• Net loss for two
businesses
consecutive periods due to
such factors as the slump
in flat-screen TV sales;
undertook steps to promote
structural reforms while
bringing about a return to
positive free cash flows
• Improving the Company’s
financial position became
the most important
management issue;
suspended annual dividend
payments
2. Improve the Company’s
financial structure
3. Promote growth and
increased efficiency by
exiting from an in-house
approach
4. Promote a growth
strategy that begins with
customer needs
• Put in place the Brand
Slogan “A Better Life, A
Better World”
• Resumed the payment of
dividends
15
Panasonic Annual Report 2018
• Achieved the numerical
targets set out under
CV2015 ahead of schedule
with the Automotive and
Housing businesses serving
as growth engines
- Operating profit target:
350 billion yen or more
- Operating profit to sales
ratio target: 5% or more
- Cumulative free cash flow
target: 600 billion yen or
more
• Overarching target of net
sales totaling 10 trillion yen
in the fiscal year ending
March 2019 (FY2019)
• Completed business
restructuring measures and all
necessary steps to address
unprofitable businesses
Strategic investment totaling
1 trillion yen (Please refer to pages 19–20.)
• Commenced strategic
investments totaling 1 trillion
yen focusing mainly on M&As
and capital expenditures
aiming for inorganic growth
• Commenced a capital and
business alliance with Ficosa
International, S.A., a Spanish
automotive parts and systems
supplier (made a consolidated
subsidiary in FY2018)
• Major initiatives
• Performance
Introduction
Growth Strategy
Foundation for Growth
Results for Fiscal Year
Ended March 2018
Notes:
1. Performance data prior to the fiscal year ended March 2017 (FY2017) is presented on a U.S. GAAP basis. Performance data is presented on an IFRS
basis effective from FY2017.
2. Net profit is recorded as net income attributable to Panasonic Corporation in and before FY2016 and net profit attributable Panasonic Corporation
stockholders from FY2017.
8,300.0
425.0
7,982.2
380.5
236.0
250.0
7,343.7
276.8
149.4
3/2017
3/2018
IFRS
3/2019 Forecast
• Reflecting on the original principle that
profit shows how much we contribute
to customers, shifted our focus to profit
away from net sales as the Company’s
FY2019 key management goal
• Categorized all Business Divisions into
the three high-growth, stable-growth,
and low-profitable businesses;
undertook well-focused investments
• Realized sales growth in real terms
after excluding the effects of exchange
rates
• Established Connected Solutions
• Outlook of continued increases in both
Company; strengthened the solutions
business targeting the corporate sector
• Announced an agreement between the
Company and Toyota Motor
Corporation to begin studying the
feasibility of a joint automotive
prismatic battery business
• Realized increase in both net sales
and operating profit
(for the first time in seven years in real
terms after excluding the effects of
exchange rates)
net sales and profits driven by
high-growth businesses and especially
the automotive battery business
Net sales
Operating profit
8,300
425
250
Net profit
billion yen
billion yen
billion yen
• Made Hussmann Corporation, a U.S.
• Made PanaHome Corporation
industrial refrigerator and freezer
display case manufacturer, a
consolidated subsidiary
• Operations launched at the Panasonic
battery cell production facility inside the
Gigafactory of Tesla of the U.S.
(currently Panasonic Homes Co., Ltd.)
a wholly owned subsidiary
• Made Zetes Industries S.A. of
Belgium, which is involved in logistics
solutions, a wholly owned subsidiary
• Commenced mass production and
shipment of automotive batteries from
a factory established in Dalian, China
Panasonic Annual Report 2018 16
Medium-to-Long Term Business Overview
Fiscal 2018 Results / Fiscal 2019 Outlook
Growth in Sales and Profits in Fiscal 2019,
Driven by High-Growth Businesses
Fiscal 2018 Results
For details, refer to page 83
Sales and profit growth in real terms for
first time in seven years
In fiscal 2018, sales increased by 9% year-on-year to
7,982.2 billion yen due mainly to significant growth in
the automotive-related business. Contributions were
made in particular by the Automotive Business, which
includes automotive infotainment systems and
car-related equipment, and the Energy Business, which
includes rechargeable batteries. Newly consolidated
Ficosa, a Spanish automotive parts and systems
supplier, and Zetes, a Belgian logistics solutions
company, along with favorable exchange rates, also
contributed to the growth in sales.
Although fixed costs increased 62.2 billion yen
compared with the previous fiscal year, profit increased
on sales growth of 113.0 billion yen, while streamlining
benefits and improvement in other income/loss also
helped offset the higher costs. As a result, operating
profit increased 103.7 billion yen to 380.5 billion yen,
Fiscal 2019 Business Categories
and net profit attributable to Panasonic Corporation
stockholders rose 86.6 billion yen to 236.0 billion yen
compared with the previous fiscal year. For the first time
in seven years (since fiscal 2011), both sales and profits
increased in real terms excluding the effects of foreign
currency exchange rates. ROE improved by 4.5
percentage points yea-on-year to 14.4%. Panasonic will
continue to target ROE of 10% or higher going forward.
Free cash flow was negative 35.6 billion yen.
Excluding strategic investments, free cash flow would
have been 132.7 billion yen, a decline of 57.6 billion yen
from the previous fiscal year. Although net profit
attributable to Panasonic Corporation stockholders
expanded, inventories increased temporarily at the
North American automotive battery business, and
higher sales led to an increase in working capital
requirements. Panasonic aims to improve free cash flow
by recouping investments in strategic projects.
High-growth
businesses
Stable-growth
businesses
Low-profitable
businesses
Breakdown of
business categories
(FY2019 forecast)
Driving force for sales and profit growth. Concentrating management resources
including large-scale investments.
Automotive batteries, next-generation cockpit systems, ADAS, air-conditioners,
electromechanical control devices, etc.
Steadily generating profit by taking advantage of our competitiveness and
generate investment funds for high-growth businesses.
White goods, commercial refrigeration & food equipment, wiring devices,
lighting equipment, avionics, process automation, security cameras,
electronic materials, dry batteries, etc.
Significantly improving profitability by business transformation,
fixed cost reductions, and rationalization
TVs, fixed-line phones/fax, building materials, solar systems, ruggedized PCs,
semiconductors, LCD panels, etc.
Sales
8.3 trillion yen
Low-profitable
Operating Profit
425.0 billion yen
High-
growth
Low-profitable
High-
growth
Stable-growth
Stable-growth
17
Panasonic Annual Report 2018
Introduction
Growth Strategy
Foundation for Growth
Results for Fiscal Year
Ended March 2018
Policy and Outlook for Fiscal 2019
Growth strategies in three business
categories
In fiscal 2019, Panasonic will execute growth strategies
in the three business categories comprising high-growth
businesses, stable-growth businesses and
low-profitable businesses.
In high-growth businesses, as a result of focused
investments, both sales and profits are expected to
grow significantly, mainly in the automotive battery
business, in fiscal 2019. In stable-growth businesses,
although overall sales and profit increases are expected,
sales and profit in Avionics are expected to decrease
due to weakening demand for large aircraft. Therefore,
growth in this fiscal year is expected to slow down. In
low-profitable businesses, the Company projects sharp
improvement in profits, especially in semiconductors
and LCD panels, as a result of ongoing initiatives for
business transformation, cutting fixed costs and
streamlining operations.
Forecasting continued growth in sales and
profits
Panasonic forecasts growth in both sales and profits
again in fiscal 2019, driven mainly by high-growth
businesses.
The Company forecasts sales growth of 4%
year-on-year to 8,300 billion yen. A major factor behind
this growth is sharply higher sales of automotive
batteries in real terms excluding the effects of foreign
currency exchange rates. We also expect contributions to
sales growth from the Industrial Business, Automotive
Business, and Air-Conditioner Business.
Panasonic projects profit growth with an estimated
180 billion yen boost from higher sales, while ongoing
efforts to strengthen management should help mitigate
an increase in fixed costs from expenses related to
sales growth and investments in growth areas.
High-Growth Businesses to Drive Growth in Fiscal 2019
Net Sales
(Billions of yen)
8,300.0
Operating Profit
(Billions of yen)
Others
Low-profitable
High-growth
Stable-growth
7,982.2
Other
income/loss
425.0
High-growth
Low-profitable
Stable-growth
380.5
Effect of exchange rates
Effect of exchange rates
Others
Year Ended March
2018
Year Ending March
2019(Forecast)
Year Ended March
2018
Year Ending March
2019(Forecast)
Panasonic Annual Report 2018 18
Medium-to-Long Term Business Overview
Strategic Investments for Medium-to-Long Term Growth
Advancing Large-Scale Capital Investments and M&A
Investments decisions made for 85%
of 1 trillion yen budget
Panasonic plans to undertake strategic investments
totaling 1 trillion yen and has spent part of this total
since fiscal 2016 with the aim of achieving sustainable
growth in sales and profits.
As a result of making prudent investment decisions,
taking into account possible risks while clarifying
positions within business strategies, the Company has
gone ahead with large-scale capital investments in
business areas likely to experience high growth,
such as in an automotive lithium-ion battery plant. As
for M&A, Panasonic has also executed some large
acquisitions that include Ficosa International, S.A.
(Ficosa), a Spanish automotive parts and systems
supplier, as well as Hussmann Corporation, a U.S.
manufacturer of commercial-use refrigerated and
freezer display cases.
As a result, the Company has already spent about
70% of its 1 trillion yen budget for strategic investments
as of the end of fiscal 2018. Adding future plans,
decisions have been made for about 85% of this
budget. In fiscal 2019, the Company will move forward
with strategic investments while keeping an eye on
risks and returns, and take appropriate measures
while stringently monitoring the profits and cash flow
generated from invested projects.
Expansion of production capacity for
automotive batteries to satisfy robust
demand
In fiscal 2018, our lithium-ion battery plant commenced
operations inside Tesla’s Gigafactory in the U.S. Our
plant is in charge of mass producing the high performance
cylindrical “2170 cell” used in Tesla’s new Model 3
electric vehicle and energy storage systems. We will
continue investing capital in fiscal 2019 towards
achieving annual production capacity of 35GWh.
In March 2018, mass production and shipments
commenced at our automotive battery plant in Dalian,
China. This plant is our first production base for
prismatic automotive lithium-ion batteries in China. On
1 trillion yen
Under
consideration
Appliances
Eco Solutions
Connected
Solutions
Automotive &
Industrial Systems
Decision
made
Approx.
85 %
As of March 31, 2018
19
Panasonic Annual Report 2018
Large-Scale Capital Investment
Manufacture of solar cell modules under joint
operations with Tesla in the U.S.
Manufacture of lithium-ion cells within Tesla’s
“Gigafactory” in the U.S.
Manufacture of automotive batteries in China
Manufacture of automotive batteries in Japan
(Himeji and other plants)
M&A
Hussmann, a U.S. industrial refrigerator, freezer
display case manufacturer
PanaHome (now Panasonic Homes)
TeraDiode, a U.S. industrial laser manufacturer
Zetes, a Belgian logistics solutions company
ITC Global, a U.S. provider of satellite
communication services
Ficosa, a Spanish automotive parts and systems
supplier
OpenSynergy, a German automotive software
developer
Panasonic Industrial Devices SUNX
(photo credit Tesla Inc.)
Introduction
Growth Strategy
Foundation for Growth
Results for Fiscal Year
Ended March 2018
the commencement of mass production and
shipments, we have now put in place a three-pillar
global production system in Japan, the U.S. and
China for automotive batteries. This plant will supply
high-output, high-capacity, highly safe prismatic
lithium-ion batteries to not only the Chinese market, but
the global market as well, including North America.
In Japan, Panasonic has decided to produce new
prismatic automotive lithium-ion batteries at its Himeji
Plant, a production base for LCD panels. We plan to
set up an integrated production line at this plant from
component process to assembly. Plans call for launching
production during fiscal 2020.
Deepening collaboration and
synergies via M&A
In September 2017, the Company began mass
production of electronic rear-view mirrors, the first
product that was developed in collaboration with
Ficosa, a Spanish automotive parts and systems
supplier that was turned into a consolidated subsidiary
in April the same year, as a fusion of Ficosa’s mirror
technologies and Panasonic’s camera and LCD
technologies. In December 2017, mass production and
shipments commenced for the telematics control unit
(TCU) that enables emergency notifications in the event
of a car accident and the remote tracking of stolen
vehicles. Panasonic is working more closely with Ficosa
to expand their collaboratively developed products and
win orders.
In April 2018, PanaHome Corporation, which was
made a wholly owned subsidiary in October 2017,
changed its name to Panasonic Homes Co., Ltd. At the
same time, all of its brands were changed to Panasonic.
With the change in company and brand names, we aim
to generate synergies from our collective strengths as
a group. In addition to low-rise mid-range and luxury
homes, our area of expertise, we will focus more on
affordably priced housing, multi-story housing, and
creating communities, including non-residential areas.
Panasonic Annual Report 2018 20
Message from the CTO
Supporting the Group’s Sustainable
Growth through Innovation
and Speedy Commercialization
Yoshiyuki Miyabe
Senior Managing Executive Officer
CTO
21
Panasonic Annual Report 2018
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Growth Strategy
Foundation for Growth
Results for Fiscal Year
Ended March 2018
R&D and Innovation Strategies
Promoting innovation creation
from Group-wide viewpoint
The major direction indicated by Panasonic’s
brand slogan, “A Better Life, A Better World,”
also extends unchanged to technological
development. To continue to create
technologies that contribute to “A Better Life”
and “A Better World,” the technology sector
formulated its R&D 10-Year Vision as a
guiding principle for future research and
development (R&D). We are now promoting
a variety of initiatives in two fields, the
IoT/Robotics field and the Energy field.
With regard to our development system,
which covers technologies and materials as
well as products, we are promoting the move
of R&D to the front lines, by which we conduct
R&D more closely with our customers, and
strengthening our systems and structure
to realize more flexible, cross-sectional
management. We are also working on
Headquarters-driven organizational
reforms to promote innovation creation,
which is indispensable for the sustainable
growth of the Panasonic Group, from a
Group-wide perspective.
Newly established in April 2017, the
Business Innovation Division aims not only
to develop technologies but also to launch
new businesses itself and thus contribute to
rapid commercialization. The Technology
Innovation Division, which was renamed
from the Advanced Research Division in
January 2018, also promotes innovation by
means of innovative technologies, primarily
in the fields of energy and sensing, and
aims to contribute to business growth. With
the world changing dramatically from an
industrial society and information society
to a super-smart society, the Panasonic
Group will take the lead and accelerate its
innovation creation.
R&D Organization
Appliances Company
Corporate Engineering Division
Air-Conditioning and Cold Chain Development Center
Home Appliances Development Center
Innovative Entertainment Development Center
R&D Planning Center
Connected Solutions
Company
Innovation Center
Production Engineering Center
Innovation
Promotion Sector
Business Innovation Division
Technology Innovation Division
Manufacturing Technology and Engineering Division
Innovation Strategy Office
Core Element Technology Development Center
Eco Solutions Company
Engineering Division
Innovation Center
Advanced Technologies Development Center
Lifestyle & Architecture Design Laboratory
Automotive &
Industrial Systems Company
Engineering Division
Sensing Solution Development Center
Energy Solution Development Center
Platform Development Center
Energy Technology Development Center
Energy Design Development Center
Automotive Development Division
Platform Development Center
Vision & Sensing Technology Development Center
Integrated Solution Development Center
As of April 2018
Panasonic Annual Report 2018 22
Message from the CTO
Panasonic Technological Capabilities and
Manufacturing Capabilities
Technological capabilities and
manufacturing capabilities
accumulated in consumer electronics
Having diversified from the manufacture of
wiring equipment in 1918, Panasonic has
been expanding its business scope mainly
in consumer electronics. The variety of
technological capabilities and range of expertise
accumulated and refined in the course of
manufacturing that shows a close affinity for
the customer are our great strengths.
From visual/imaging, audio/voice to
mechatronics (mechanisms) and materials/
devices, Panasonic has created a number of
products that make society better and more
convenient by skillfully combining and
amalgamating advanced technologies in a
wide variety of fields.
Diverse technological
capabilities are Panasonic’s
great strength
We cannot, however, produce superior
products through technological capabilities
alone. Advanced manufacturing capabilities
are indispensable in the utilization of
technology in the pursuit of performance,
quality and usability. The advanced
manufacturing capabilities include coating,
molding, measurement, mounting, machine
processing, control, CAE (simulation) and
quality control, as well as the adjustment and
integration of technologies that interlink these
processes. These manufacturing capabilities
are another major strength that Panasonic has
cultivated, and their importance will not change
even in the era of artificial intelligence (AI), IoT
and robots.
We will promote innovation based on the
two strengths of our technological capabilities,
which span a wide range of fields, and
manufacturing capabilities, which enable us
to make products reliably, while continuing
to create new businesses.
Manufacturing from user viewpoint
also utilized in B2B
One of the greatest strengths we have cultivated
in the field of consumer electronics is knowledge
Examples of products that have improved Panasonic’s technological capabilities and manufacturing capabilities
1927
Launches National
Lamp
1952
Company’s first black &
white TV
1961
Launches first Matsushita
home
1968
Develops first “Panasert”
automated resistor
mounting machine
1988
Launches Panasonic’s
first electronic still
camera
2010
Begins mass production
of HEV lithium-ion
batteries
1950
Launches Company’s
first car radio
1958
Launches Company’s
first household tape
recorder
1963
Launches “National
Hi-Top,” world’s longest-
lasting dry cell battery
1978
Launches Panasonic’s
first compact office
computer (PC)
1996
Launches industry’s first
digital mobile phone
weighing less than 100 grams
2017
Develops facial recognition
gate, put into operation at
Tokyo International Airport
23
Panasonic Annual Report 2018
Introduction
Growth Strategy
Foundation for Growth
Results for Fiscal Year
Ended March 2018
and know-how on usability. This is a unique
strength of consumer electronics manufacturers
who have always considered manufacturing
based on the viewpoints of users.
In the world of consumer electronics,
before putting products on the market we will
thoroughly verify their usability from the
viewpoints of users, not only a product’s
functions but also its ease of use, including
design, and ease of understanding its
operation. For example, we conduct drop tests
on notebook PCs. This idea is not on the
assumption that a notebook PC is a precision
machine and will break if dropped and thus is
to be handled carefully, but because we regard
notebook PCs as consumer electronics and
develop them from the viewpoints of users.
I think notebook PCs have been accepted by
many users for that very reason.
Panasonic currently has many businesses in
the B2B field but, as in the case of consumer
electronics, we believe that “enabling ordinary
people to use machines effortlessly” will be
the key to success. In fact, we have received
particularly high praise in the services industry
area, where consumers come into in contact
with equipment and systems. One such
example is the face recognition gates selected
by the Immigration Bureau of the Ministry of
Justice. Developed in response to the rapid
increase in the number of visitors to Japan,
this product is helping to solve the problems
associated with a desire to streamline the
“Enabling ordinary people
to use machines effortlessly”
is key to success
departure and return procedures for Japanese
citizens. One feature of our system is that
even if mistakenly placed facing the opposite
direction, the passport will still be readable.
Although this is a function that would be
unnecessary if the system were for
professionals, such considerations are
important for machines used by ordinary
customers. Here, the knowledge and
know-how of usability accumulated over many
years in consumer electronics is put to use.
As in this case, in accordance with the
more widespread use of IT, it is expected that
equipment and systems that were traditionally
targeted only at experts would be brought to the
forefront and that scenarios in which ordinary
customers would directly operate them would
increase more and more in the future. In such
B2B used by C* scenarios, we should be able to
demonstrate our strengths further.
* B2B, but where a consumer is the end user
Diverse Technological Capabilities
Visual/Imaging
Audio/Voice
Light
Connectivity/
Communications
Heat
(Thermal Control)
Energy
Mechatronics
(Mechanisms)
Materials/
Devices
IoT, Usability
Manufacturing Capabilities That Give Shape to Technologies
Coating
Molding
Measurement
Mounting
Machine
Processing
Control
CAE
(Simulation)
Quality
Panasonic Annual Report 2018 24
Message from the CTO
Initiatives to Accelerate Innovation
Picking up the pace of innovation to
adapt to changes in the operating
environment
Today we are in an era that is undergoing a
rapid transition to a super-smart society, and
amidst this, a transformation to digital and IoT is
taking place across a range of fields. To come
out on top when faced with dramatic change, it
will be critical to transform overall business
processes in a way that the times demand.
In the past, with mass production and large
sales volumes, products became independent
of their makers as soon as they were shipped
from the factory. Now, however, we are in the
era of IoT, where all kinds of things are
connected to the Internet. Even after a product
is shipped, it serves as a way to link a maker
with its customers, enabling usefulness to be
provided in an ongoing manner. We can say
that this is technology that rebuilds what was
once the bond between people. By moving
quickly to expand this kind of “fusion-type
business of hardware and networks” we are
bringing to bear our wide-ranging accumulation
of technological and manufacturing capabilities
that, we are confident, will lead to the creation
of value for our customers.
Going forward, the very way we bring about
technological development will itself need to
change. Technology in the age of mass
production for “unspecified and large numbers” of
customers was expected to be perfect. However,
in the age of IoT, where it is possible to target a
“specified and large number” of customers, the
most important aspect of technology
development is, rather, in “the process whereby
customer value is realized.” Looking for
perfection right from the start, as in the past, is
something that will actually impede innovation. It
will be essential to nurture a culture in which
“imperfection” will be permissible. For that reason
last year we established Panasonic β in Silicon
Valley as a test site for innovation creation. We
believe that this initiative will be a starting point that
works across Business Divisions, and we intend to
spread this culture throughout the Group.
TOPICS
Panasonic β, Test Site for Innovation Creation
and output from, firstly, the HomeX project to
create the future of living spaces is ongoing.
Based on the breadth of our business areas
and the strengths of our diverse human
resources and technological capabilities, we will
quickly make an unprecedented “business
model for the digital networking era” and roll out
that model across the entire Group by digitally
transforming the processes involved in our
supplier and workforce relationships.
Established in Silicon Valley in the United States
in July 2017, Panasonic β is a new initiative for
undertaking collaboration that transcends
organizational and functional boundaries.
Having commenced activities driven primarily
by young engineers and designers brought
together from each Divisional Company and the
head office, the organization was formally
established in April 2018.
Creating new business models and solutions
from a global perspective requires the
promotion of cross-sectional collaboration
across various functions and Business Division
frameworks as well as the processes to “mass
produce” cross-value innovation.
As a model factory geared toward those
needs, Panasonic β realizes ways of working
and a working environment akin to those of a
start-up company. With a sense of urgency, its
young, talented employees are promoting
diverse projects that will give shape to ideas,
25
Panasonic Annual Report 2018
Introduction
Growth Strategy
Foundation for Growth
Results for Fiscal Year
Ended March 2018
Views from
Management
Facing Customers Backed by Strength of
Our Manufacturing Diversity,
Contributing to Business Creation
Tatsuo Ogawa
Director, Manufacturing Technology and Engineering Division
are our efforts in Cross-Value Innovation. We are
lending our support from the manufacturing
angle to new trials that cross Business Divisions,
like Panasonic β. As a part of these efforts, we
are currently giving form to new ideas/concepts
as quickly as possible and working on “rapid
manufacturing” to collaborate with customers.
In addition to the aspects mentioned above,
we are also promoting efforts in so-called
circular economies, such as the recycling of
resources and energy and waste-free
production, from the environmental point of
view. After having made things and delivered
them to customers, they are turned back into
materials again by recycling and lead to the
design of the next product. Taking all of this into
consideration, we will promote efforts towards a
recycling-oriented society, such as
easy-to-recycle designs. Efforts toward factories
that emit zero CO2 are also of importance. In
conjunction with the Panasonic Environment
Vision 2050, in addition to minimizing energy at
the time of manufacturing, we will also work on
the energy-saving qualities of our products and
on energy creation.
Since its foundation, it has been the
Company’s policy to honestly respond as
customers and their issues have become clear.
As the Company’s business shifts to B2B, we
are proud of our ability to be in tune with our
new customers and will continue to solve the
issues they face in a consistent and honest
manner. For example, we are able to
manufacture automotive batteries with high
quality and safety features that meet our
customers’ needs. You can do a good job if you
have points of contact with customers, and the
same applies to manufacturing. Backed by the
wide-ranging manufacturing and technological
strengths that the Company has accumulated,
we will face and collaborate with customers to
accelerate the creation of innovation.
Panasonic possesses a range of widely diverse
manufacturing sites. We have factories that are
primarily engaged in processes related to
materials/devices, and factories that assemble
rice cookers, refrigerators, and others. There
are also locations responsible for installing
software. This diversity is a characteristic of
Panasonic’s manufacturing, and I believe it to
be a major strength in meeting the
wide-ranging customer demands in these times
when the operating environment is changing at
a bewildering pace.
The mission of the Manufacturing
Technology and Engineering Division for which
I am responsible is to leverage the
manufacturing strengths that we have
cultivated in the course of the Company’s long
history in resolving the problems faced by
customers and society. Innovation—by
bundling, combining or bringing about the
evolution of a wide variety of core technologies,
and amalgamating them with newly developed
technologies and external technologies—will
lead to new solutions, products and businesses.
To that end, we are currently promoting
innovation in manufacturing from two aspects.
First are our efforts to further refine the
Business Division-based manufacturing that is
the Company’s forte. In developing smart
manufacturing through efforts that fully utilize
IT, we are aiming to speedily supply products in
a way similar to mass-produced products to
fulfill diverse customer orders. At the
production preparation stage, we will utilize
digital technologies, such as IoT and AI, derive
the optimal production method and conduct
process design. After the start of production,
by means of dynamic production management
compatible with order status we will resolve the
bottlenecks in low-volume, high-mix production
by the optimization of lot size and production
sequences, shortening lead times. Through IoT,
we will also gather and store all of the
enormous amounts of factory information, while
utilizing AI to find the mechanisms that cause
defective products. By these means, we will
conduct predictive management and aim for
zero defective products.
Second are our efforts to combine core
technologies from inside and outside the
Company to thereby create new value. These
Panasonic Annual Report 2018 26
Message from the CTO
Working to Create New Businesses
That Serve as Engines of Growth
Views from
Management
Masato Aizawa
Director, Technology Innovation Division
I think that the most important thing for
researchers is to find problems to solve. In
anticipation of the practical applications of
products that bring about innovation, we set
the issues that must be solved and objectives,
and it is important to clearly indicate the
specific methods used to resolve issues by the
very best, original or leading technologies.
Technological developments must be
commercialized and lead to social contributions.
I personally joined Panasonic after working for an
overseas national laboratory and switched to
thinking that, since it is a corporate research
institute, it is important to know how to connect
advanced research to business and how to
convert that research into cash. Only when we
have achieved that does it become possible for
us to contribute something to the Company that
leads to a contribution to society. Creating
something of merit in technological development
involves asking two questions: what is lacking to
bring this into the world and of what value will this be
to customers? For innovation to occur, the answers
to these questions have to be provided first. The
Technology Innovation Division aims to create new
businesses that will become Panasonic’s growth
engine over the medium-to-long term. For that
reason, we are looking at where we should make
changes and what areas should be extended and
are making progress with reforms.
We engage in technological development in
four layers. The layer that takes up the most in
The Technology Innovation Division’s Four
Layers in Technological Development
1. Creation of Core Technologies for Energy & Sensing
Innovation of the core technologies the Company
has at its disposal (storage batteries, solar cells,
hydrogen related technologies, etc.). Aiming to
contribute to business in about three years.
2. Creation of Emerging Technologies for New Markets
Creation of innovative technologies in fields where
Panasonic will be proactive in the future. Aiming to
contribute to business in about five years.
3. Strategic Platform Technologies
The strengthening of several technological fields,
strategic fundamental technologies. Aiming to
reform the development processes themselves.
4. Pioneering Research
Amalgamating world-class knowledge, aiming to
create the seeds of game-changing technologies.
terms of resources is the “core technology for
energy & sensing” layer, in which we aim to make
a contribution to business in three years or so.
Taking around half of the remaining resources is
the “emerging technology for new markets” layer
that addresses roughly five-year aims. The other
two are the layer that changes an R&D process
itself and the layer that aims to create the seeds
of completely new kinds of game-changing
technologies in an international competitive
environment. Panasonic has at its disposal a
vast array of technologies and enormous
amounts of data that the Company has
accumulated in the course of its long history. Its
talent pool is equally vast. These are the
Company’s major strengths. For example, in
fields such as batteries and image sensors, the
level of in-house engineers is already high, and
we are setting precise KPIs and making progress
in making a contribution to business. On the
other hand, we are actively incorporating wisdom
from outside the Company into the development
of new fields and new core technologies.
Moreover, rather than aiming for a completely new
market with a completely new technology, I believe
that a “go beyond halfway” approach would be
effective. One example is exploring the possibilities
in future mobility for the practical use of the strong
technologies we possess in rechargeable batteries
for automobiles. This approach would be based
on our core technologies, such as approaching
other markets by drawing on the hydrogen and
energy-related technologies that are regarded
as our strongpoints.
We are also putting efforts into measures
designed to increase the pace of R&D. For example,
we are promoting “Materials Informatics” to
quickly search for innovative materials to improve
the performance of energy devices such as
rechargeable batteries by utilizing AI.
I believe that the era of relying on a single
technology is about to end. I also believe that
future technological development should bring
about the amalgamation of technologies, not only
from electronics but also from different fields, and
focus on a world interlinked by AI and IoT. The
Company is taking on the challenges in a variety
of technological developments in wide business
fields, and I myself joined the Company 10 years
ago having developed a fascination in this area.
Taking full advantage of this strength, we aim to
create world-changing innovations.
27
Panasonic Annual Report 2018
Introduction
Growth Strategy
Foundation for Growth
Results for Fiscal Year
Ended March 2018
TOPICS
“R&D 10-Year Vision,” a Policy for Research and Development
The development of technology requires
decisions to be made on what path to take
while constantly imagining what the destination
will be in 10 years’ time. Taking this into
account, Panasonic’s “R&D 10-Year Vision”
was revamped and announced in fiscal 2016
as a policy for R&D with an eye toward the
future. Panasonic has determined two key
areas, “IoT/Robotics” and “Energy,” as
business fields in which we should apply
Group-wide efforts, and this vision lays out our
mid-term direction for R&D.
Within IoT/Robotics, we are working to
advance the development of technologies
associated with AI and sensing, user interface
(UI) and user experience (UX). We aim to bring
about solutions that contribute to AI robotics
home appliances and autonomous driving, as
well as the rationalization of store management
and logistics.
In the field of Energy, we seek to utilize
technologies associated with storage and
hydrogen energy with the goal of providing
energy solutions for homes and buildings, and
for vehicles. Through these efforts our aim is to
contribute to solving the issues that face
society on the environmental front, such as
achieving a low-carbon society.
Panasonic will continue to accelerate
innovation creation while looking toward the
future, as we aim to realize “A Better Life” and
“A Better World.”
R&D 10-Year Vision
Please refer to the “R&D 10-Year Vision” website for details.
Freedom from
Housework
No Accidents
and No Congestion
Creation of a
Low-carbon Society
Energy
Diversification
• Life-data Analysis
• Obstacle Detection
• Emotion Estimation
• Recommendation
• Automatic Cleaning /
Storage
• Outside-world
Recognition
• Action Plan
• Human-state
Recognition
• Next-generation
Solar Battery
• Next-generation
Storage Battery System
• V2H (Vehicle to Home)
• Small-scale Distributed
Power
• Grid-connected Power
Control
• Storing Power as
Hydrogen
AI Robotics
Home Appliances
Autonomous Driving/
Commuter
Home Energy Solutions
Building and Regional
Energy Solutions
IoT/Robotics
Artificial intelligence
Sensing
UI / UX
R&D
10-Year Vision
Energy
Storage
Hydrogen Energy
Stores and
Service Solutions
Next-generation
Logistics and Transport
Automotive
Energy Solutions
Improvement of
Service Quality
• Multilingual Speech
Translation
• Dialogue
• Action Prediction
• Automatic Inventory /
Replenishment
Elimination of
Labor Shortage
• Object Recognition
• Picking Various Objects
• Human Collaborative
Work
• Autonomous
Transportation
Zero Gas-exhaust
Vehicle
• Next-generation
Power Devices
• Innovative lithium-ion
Battery System
• Non-contact Charging
System
Panasonic Annual Report 2018 28
Message from the CSO and CFO
Further Growth on the Back of
Business and Financial Strategies
Looking back at Panasonic’s transformation and innovation since fiscal 2013, this message outlines
Panasonic’s direction toward future growth in terms of its investment, financial discipline, and
business portfolio.
Mototsugu
Sato
Representative Director
Senior Managing
Executive Officer / CSO
Hirokazu
Umeda
Director
Managing Executive
Officer / CFO
29
Panasonic Annual Report 2018
Introd
duction
Growth Strategy
Foundation for Growth
Results for Fiscal Year
Ended March 2018
Looking Back at the Path Taken
toward Sales and Profit Growth
While supporting the CEO, Kazuhiro
Tsuga, a series of reform measures have
been implemented. Looking back, can
you comment on any especially
important initiatives?
The fruits of strategic investments
totaling 1 trillion yen, mainly in
high-growth businesses, have
begun to emerge.
Sato
When Mr. Tsuga became president
in fiscal 2013, the Company focused on
restructuring its operations to eliminate
unprofitable businesses. After achieving a
certain level of success, we then strived
toward resolving the next major issue, “being
unable to identify growth areas.”
Since October 2013, I have worked with
Mr. Tsuga to squarely address this issue,
taking the role of planning. Despite some
progress with certain preparations for future
growth, including efforts to shift human
resources to the automotive businesses, it
became clear that substantial growth could
not be expected while the Company
maintained its conventional stance of limiting
its investment within the range of depreciation.
It is at this point that we decided to adopt a
strategic investment approach, and to engage
in bold capital expenditures and M&A
investments totaling 1 trillion yen over a
four-year period from fiscal 2016. To prioritize
our investment areas, Business Divisions
were classified into the three high-growth,
stable-growth, and low-profitable categories.
For high-growth businesses, we concentrate
management resources. Stable-growth
businesses generate steady profits for
investment resources. And for low-profitable
businesses, we implement thoroughgoing
measures to improve profitability. By the end
of fiscal 2018, we have invested approximately
70% of the 1 trillion yen focusing on
high-growth businesses, and the investment
decision has been made for another 15%.
As a result of these initiatives, Panasonic
achieved a positive turnaround reporting
increases in both sales and profit in fiscal 2018.
For fiscal 2019, we are expecting another
year of sales and profit growth, driven by the
automotive and other high-growth businesses.
Drawing on the platform strengths that we have
nurtured over many years and the preparations
we made for growth, I am convinced that our
efforts to clarify growth areas through the
classification of businesses, coupled with our
bold investment approach, are beginning to
bear fruit.
Umeda
I would like to expand a little further
on the significance of strategic investments.
Since October 2012, I have tried to manage
and oversee the Group’s performance as
General Manager, Corporate Management
Support Department, Corporate Strategy
Division. In specific terms, visualizing
management of Divisional Companies and
Business Divisions, raising issues while
providing information to the president and
management in a timely manner, and setting
the direction for unprofitable businesses.
These were merely “eliminating the negatives.”
While improving profit and turning around the
Company’s losses, sales continued to decline.
I had a strong sense of crisis that we were
heading toward business contraction with the
path being taken.
Under these circumstances, I am convinced
that the decision to adopt a policy of strategic
investment totaling 1 trillion yen, and the
identification of growth areas after thorough
deliberation, are of considerable significance.
For example, through the process of
evaluating various investment opportunities,
we became convinced that automotive
batteries, with its strength being enhanced
through the acquisition of Sanyo, can be
positioned as a high growth area.
In addition, the 1 trillion yen investment
policy has proven symbolic for Group-wide
employees, once again having a higher
perspective while raising the level of awareness
toward growth. In this regard, the decision to
adopt a strategic investment approach is also
of considerable significance and has helped
to realign the mindsets of employees.
Panasonic Annual Report 2018 30
Message from the CSO and CFO
Investment and Financial Discipline
What approach will you adopt toward
investments aimed at growth going
forward? Can you give us your thoughts
including your view from a financial
perspective?
Balance between investment and
financial discipline, taking control of
the accelerator and brake.
Umeda
We have high growth areas such
as automotive batteries. To realize such
growth requires substantial investment.
Against this backdrop, I am of course
focusing on maintaining a balance between
investment and financial discipline as CFO.
The CEO and CSO basically play the role of
stepping on the accelerator when making an
investment decision. As CFO, my role is to
apply the brakes. Having said this, I also
recognize the critical need not to miss an
8.6
10.6
11.1
9.9
14.4
–47.2
3/’13
3/’14
U.S. GAAP
3/’15
3/’16
3/’17
IFRS
3/’18
(Years ended March 31)
ROE
(%)
20
0
−20
−40
−60
Credit Ratings as of July 31, 2018
Ratings agency
Long term (outlook)
Short term
Rating and Investment
Information
Standard & Poor’s
Moody’s
A
A–
A3
(stable)
(stable)
(stable)
a-1
A-2
—
31
Panasonic Annual Report 2018
important growth opportunity. It is also my
role to secure the necessary funds for
investment. I make it a point to shift between
acceleration and braking modes at just the
right time while constantly maintaining a balance
between investment and financial discipline.
Panasonic has not always been
Sato
successful in its past investments. This
includes our investment in plasma panels.
With this in mind, it is extremely important
that the CSO and CFO maintain a deep mutual
understanding of their respective roles and
control the shift between acceleration and
braking modes while sharing their thoughts
toward relevant issues as well as values.
In that sense, Mr. Umeda and I frequently
meet to deliberate on a wide range of issues.
I am confident that our understanding of matters
remains in sync. No decision is made until a
consensus has been reached and both of us
are completely satisfied. Hence, we have a
sound decision-making process.
Steadily recouping strategic
investments totaling 1 trillion yen as
the source for further growth
Umeda
To fund its strategic investments
totaling 1 trillion yen since fiscal 2016, the
Company has drawn on its cash reserves as
well as the cash flows from its business
activities while issuing bonds. Looking ahead,
we will consider the best method for funding
future investments. Since we have undertaken
a massive amount of investment, we must
now secure a return and generate additional
cash. As a part of these efforts, we are
comprehensively monitoring the status of
investment projects at Board of Directors and
Group Strategy meetings.
In addition, we are working to improve the
return on invested capital through efforts to
recoup strategic investments. Our goal is to
continuously secure an ROE of 10% or more
on a Group-wide basis. Meanwhile, we will
also emphasize financial stability. This will
allow us to engage vigorously in future
investments while adapting to changes in our
business structure.
Introduction
Growth Strategy
Foundation for Growth
Results for Fiscal Year
Ended March 2018
Toward Further Growth
Panasonic made a turnaround to increased
sales and profit. What needs to be
changed for medium-to-long term growth?
Business portfolio management, not
being engaged in “everything”
Sato
The largest issue is in managing
our business portfolio. Currently, Panasonic
is comprised of 37 Business Divisions. It is
impossible to allocate the Company’s limited
resources sufficiently to all 37 Divisions. In
the past, Panasonic has worked diligently to
do everything. While we have tried to maintain
a broad perspective, this has prevented us
from prioritizing our businesses. I am also
aware of the comments by our investors.
These comments include the need to adopt a
policy of selection and concentration in order
to overcome global competition, to focus
management resources on businesses with
growth potential and where the Company
remains globally competitive, and to withdraw
from unprofitable businesses where the
prospect of future growth is low.
With this in mind, it is absolutely vital that
we identify our vision of the Company and
what we aspire to become. This is the most
important criteria when prioritizing our business
areas. In determining the priority, it is also
important to ascertain whether a high return
can be anticipated. This includes the use of
such quantitative indicators as return on
invested capital and cash flows.
Umeda
Business portfolio management
plays an important role in increasing
profitability. Since fiscal 2013, Panasonic has
taken steps to reform its business structure
under the leadership of Mr. Tsuga aiming to
raise the operating profit ratio to 5%. This is,
however, the minimum target required for the
Clarify our vision of
the Company and
allocate resources for
Group-wide optimization
Panasonic Annual Report 2018 32
Message from the CSO and CFO
drive the Company forward in the future. To this
end, it is vital that the candidates identified
experience situations where they are required
to make significant decisions at an early stage
of their career by being assigned to take
charge of a Group company. Whether the
scale is big or small, the experience gained is
invaluable in helping nurture the skills necessary
to successfully engage in management. An
employee grows the most when he or she is
placed in a situation where every decision made
and responsibility taken must be done as an
individual. Looking back on my own experience,
it is these types of extreme situations that
helped prepare me for management.
Umeda
I agree. Even when the scale of an
overseas organization is small, I believe it is
important to gain first-hand experience in the
overall management of that organization.
Meanwhile, it is equally important to grasp the
total picture of Panasonic. For me, both
experiences of managing a small organization
within the Group and participating in
headquarters management have been
extremely important. Panasonic is a huge
organization that remains active across a
wide range of fields. It is extremely difficult to
become well versed in every aspect of the
Company’s business. Our founder Konosuke
Matsushita used to say “grasping the knack of
management is worth a million dollars.” Gaining
experience in both is the ideal way of grasping
the knacks necessary for management.
Sato
At a company like Panasonic, it is
unrealistic in trying to develop top management
who are well versed in every aspect of the
Company’s business. Hence, it is especially
important to be able to entrust the work to the
most appropriate personnel. In this context, it is
equally important to develop an eye for talent.
Based on this understanding, it is vital that
we provide candidates with the necessary
experience. Our roles are to therefore give
employees every opportunity to gain the skills
required to lead the Company in the future.
Company to survive. Well within sight of
achieving this target, I believe we must focus
on prioritizing our business and concentrate
on areas where we can stand out in order to
improve profitability even further.
Generating cash is also a significant
aspect of business portfolio management. As
I mentioned, our basic policy is to recoup
returns from strategic investments to fund
future investments. We plan to allocate more
cash to growth businesses by generating
cash through the replacement of businesses
while conducting well-focused investment.
Aiming for Group-wide optimization
of Business Divisions
Sato
There are issues and difficulties to
overcome when conducting business
portfolio management. While Panasonic’s
current Divisional Company and Business
Division structure is a source of considerable
strength, there is a concern that individual
Business Divisions are focusing too heavily
on cutting a path for the future by optimizing
their individual endeavors. Quite naturally, it
is extremely difficult for a Division to decide
to terminate its business activities. By the same
token, placing too much emphasis on a market
or industry that lacks growth potential, or a
business that is clearly deteriorating, runs the
risk of negatively impacting the growth and
profitability of the Company as a whole.
Panasonic employees are willing to exert every
effort whenever management calls for extra
initiatives. However, if the focus of these
endeavors is directed toward the wrong area
it is unlikely to succeed. From the Company’s
headquarters, it is important that we play the
role of making decisions in a calm and
objective manner, looking beyond individual
Business Divisions to optimize the Company
as a whole.
What are your thoughts on developing
management personnel as the platform
for sustainable growth?
Actively providing growth
opportunities for management
personnel candidates
Sato
I am aware of the importance of
developing the management personnel who will
33
Panasonic Annual Report 2018
Introduction
Growth Strategy
Foundation for Growth
Results for Fiscal Year
Ended March 2018
In closing, do you have a message
for investors?
Optimizing the business portfolio
Sato
Initiatives aimed at optimizing the
business portfolio have only just begun. Taking
into consideration the structure of society
and the labor environment in Japan in which
Panasonic is based, we must maintain a careful
approach toward the option of dramatically
terminating a certain business. This is an issue
that is common to Japan’s corporate sector
overall. Moreover, it is not an easy task to
guide the Business Divisions that are pursuing
individual optimization to work in unity and to
maximize the potential of the Group as a whole.
However, as CSO, it is my role to push forward
business portfolio management that ensures
swift optimization.
Enriching dialogue with investors
Looking ahead, each Business
Umeda
Division should remain conscious of the
return on invested capital and implement
Increase emphasis on
the return on invested capital
necessary reforms by itself not only from a
short-term perspective, but also looking 10
and 20 years into the future. Basically, each
Business Division implements autonomous
management; at the same time, Divisions
should cooperate with each other as “One
Panasonic” toward enhancing corporate
value. My role is to provide the necessary
support so that Business Divisions can
achieve this scenario.
On a final note, I will work diligently to
vigorously provide investors with useful
Company information going forward and call
for the frank opinions of our investors. Learning
from the feedback, I will make every effort to
ensure sustainable growth and to enhance
corporate value.
Panasonic Annual Report 2018 34
Divisional Company Strategies
Overview of Divisional Companies and Strategies by Business
(As of April 1, 2018)
FY2019 Forecast: Net Sales Composition Ratio
by Segment
Automotive
& Industrial
Systems
33%
Consolidated
Net Sales
¥8,300.0
billion
Appliances
32%
Appliances Company
In the consumer electronics business, Appliances Company will pursue
profitable growth by expanding its overseas business, primarily in China and
other parts of Asia, on a foundation of capabilities cultivated in Japan.
In the B2B business, it will work to establish an earnings model on its strength in
energy-saving and environmentally conscious products as well as IoT technologies.
Connected
Solutions
12%
Eco Solutions
23%
FY2019 Forecast: Operating Profit Composition Ratio
by Segment
Eco Solutions Company
Automotive
& Industrial
Systems
31%
Connected
Solutions
19%
Consolidated
Operating Profit
¥425.0
billion
Appliances
27%
Space Innovation business, which provides electrical construction materials,
housing materials and other products, is pursuing high growth in priority
regions overseas. Lifestyle Innovation business, which is involved in detached
residences, urban development and other areas, is working to achieve growth
through Group synergies with Panasonic Homes at the core.
Eco Solutions
23%
Connected Solutions Company
Breakdown by Segment
(Billions of yen)
Net Sales
Operating Profit
Appliances
Eco Solutions
Connected
Solutions
Automotive & Industrial
Systems
Subtotal
Other
Eliminations and
Adjustments
2,830.0
2,061.0
1,093.0
3,000.0
8,984.0
310.0
121.0
101.0
83.0
136.0
441.0
0
(994.0)
(16.0)
Total
8,300.0
425.0
Note 1: PanaHome became a fully owned subsidiary in FY18 and
was renamed Panasonic Homes in April 2018. In FY19, it
was transferred from Other to Eco Solutions.
Note 2: The net sales and operating profit composition ratios are
calculated by dividing the sales and operating profit of
each segment by consolidated sales and operating profit
before adding Other and elimination and adjustments.
“Other” includes business activities not belonging to the
reportable segments, such as sales of raw materials.
35
Panasonic Annual Report 2018
CNS Company will work to address social issues and establish “Gemba
Process Innovation” in order to provide solutions to corporate customers for
issues in frontline business operations and processes through its core
devices and advanced technologies.
Automotive & Industrial Systems Company
Focusing on two mainstay businesses, automotive and industrial systems,
AIS Company contributes to the creation of safe, comfortable societies.
In Automotive Business in particular, with cars continuing to evolve in
response to demands from society and against a background of tightening in
environmental regulations worldwide, we are promoting active investment and
intend to drive growth for Panasonic as a whole.
Introduction
Growth Strategy
Foundation for Growth
Results for Fiscal Year
Ended March 2018
FY2019 Strategies by Business
Air-Conditioner
Enhance overseas sales channels and promote energy-efficient products. Strengthen capabilities to
meet environmental requirements in Europe.
Small & Built-in Appliance
Maintain high profit with high market share in Japan. Expand EC sales in China and strengthen
built-in products.
Major Appliance
AVC
Accelerate sales of drum-type washing machines and others in China and Asia. Start sales of locally
produced models in India.
Stabilize sales mainly with high-end digital single-lens mirrorless cameras. Promote white goods
production at existing AVC factories.
Commercial Refrigeration &
Food Equipment
Strengthen development of new customers in North America. Establish OPEX business model to
improve profitability in Japan.
FY2019 Forecast
Sales Composition
Devices,
Others
Air-
Conditioner
Commercial
Refrigeration &
Food Equipment
Small & Built-in
Appliance
AVC
Major
Appliance
FY2019 Strategies by Business
FY2019 Forecast
Sales Composition
Lighting
Energy Systems
Overseas: Increase sales through an integrated manufacturing and sales structure focused on China,
India and Indonesia.
Domestic: Increase sales by rolling out high-value-added products for each target.
Overseas: Reinforce resources and increase sales of wiring devices centering on India and Vietnam.
Domestic: Capture demand of renovation market centering on system equipment.
Others
Lighting
Panasonic Ecology Systems
Overseas: In China, capture electronic commerce market, and in North America, expand lineup of
residential products.
Domestic: Expand profits by shifting to high-value-added products such as heat exchange ventilation fans.
Housing Systems
Panasonic Homes
Increase sales of medium- to high-end products in the remodeling market.
Improve sales growth along with profit by strengthening customer contacts by salespeople.
Increase revenue by reinforcing new construction contracts, etc.
- Enhance sales of low-rise detached residences by utilizing the best Panasonic brands.
- Expand multi-storied residence business mainly in the Tokyo metropolitan area.
Energy
Systems
Ecology
Systems
Panasonic
Homes
Housing
Systems
FY2019 Strategies by Business
Avionics
Aim for growth through new digital solutions and services, as well as enhanced maintenance and repair
capabilities, by leveraging our broad IFEC (inflight entertainment + connectivity) customer base.
Process Automation
Expand value-providing scope from single mounting machines to overall customer processes.
Expand the automobile industry business by strengthening the lineup of welding systems and enhancing
next-generation laser processing machines.
Media Entertainment
Further strengthen core products, including high-brightness projectors, and develop solutions base for
entertainment and education industries.
Mobile Solutions
PSSJ
Expand the supply chain solutions business in partnership with Zetes. Strengthen the existing hardware
business and expand the software business using our powerful hardware.
Focus on receiving more orders related to the Olympic and Paralympic Games.
Strengthen business for three key industries (public services, logistics/distribution, society)
FY2019 Forecast
Sales Composition
Panasonic
System Solutions
Japan Co., Ltd.
(PSSJ)
Avionics
Process
Automation
Mobile
Solutions
Media
Entertainment
FY2019 Strategies by Business
Automotive
Four key categories (IVI, cockpits, ADAS, and electric mechanisms) to fully contribute to increased sales.
Continue R&D investments for new themes (next-generation cockpits, etc.).
Energy
Industrial
Accelerate the shift to automotive- and industrial-use areas.
Launch full-scale operations for factories with large-scale investments (Nevada and Dalian) contributing
to increased profit.
Continue to expand sales and profits by further increasing the ratio of automotive and industrial
businesses.
Steadily improve profitability in “businesses to be turned around” (semiconductors and LCD panels) with
a view to profitability in FY2020.
FY2019 Forecast
Sales Composition
Others
Automotive
Industrial
Energy
Please refer to “Segment Information” on page 85 for results for fiscal 2018.
Panasonic Annual Report 2018 36
Divisional Company Strategies
Appliances Company
(AP Company)
In the consumer electronics business, Appliances
Company will pursue profitable growth by expanding its
overseas business, primarily in China and other parts of
Asia, on a foundation of capabilities cultivated in Japan.
In the B2B business, it will work to establish an earnings
model on its strength in energy-saving and environmentally
conscious products as well as IoT technologies.
Performance figures (results, forecasts, targets): production and sales consolidated
Please also refer to “Panasonic IR Day 2018 Appliances Company Presentation materials” (PDF).
Opportunities
Strengths
Issues
• Growth in consumer electronics markets
• Advanced technological capabilities in
from expanding middle and affluent
income classes in China, India and other
parts of Asia (Vietnam, Indonesia, the
Philippines, Thailand, etc.)
• Growing demand for energy-saving, low-
environmental-impact products due to
rising global environmental awareness
• Increasing popularity of high-value
products in Japan
• New earnings opportunities emerging
with the advance of IoT
the areas of the environment and
materials/devices for creating energy-
saving and low-environmental-impact
products, and in biological sciences and
IoT/AI/robotics, etc. for innovations in
consumer electronics usage experience
and results
• Development/design/manufacturing/
sales systems and structures in China
and other Asian countries capable of
responding rapidly and accurately to
local needs
• Initiatives for sustained growth through
focusing resources on overseas air
conditioners and white goods, where
market expansion is expected
• Operational reforms aimed at
optimization across businesses,
regions, and manufacturing and sales
• Streamlining of production costs to
offset the impact of higher raw material
prices
Net Sales
(Based on new organization /
production and sales consolidated)
(Billions of yen)
3,000
2,873.7 2,950.0
2,000
1,000
0
Operating Profit
(Based on new organization /
production and sales consolidated)
(Billions of yen)
120
121.0
107.1
90
60
30
0
Demand Trends for Air Conditioners and White Goods (FY2018-22)
(Billions of dollars)
Japan
100
Average
annual
growth rate
+0.4%
50
0
China, Asia, India (ISAMEA*)
Other regions
Average
annual
growth rate
+6.5%
Average
annual
growth rate
+4.3%
3/’18
3/’19
(Forecast)
3/’18
3/’19
(Forecast)
(Years ended/ending March 31)
(Years ended/ending March 31)
3/’18
3/’22 3/’18
3/’22 3/’18
3/’22
(Years ended/ending March 31)
*ISAMEA: India, South Asia, Middle East, and Africa Source: Company estimates
Fiscal 2018 Performance
(Based on Previous Organization)
For details, refer to page 85
Higher Sales and Profit on Strong Sales Overseas
In fiscal 2018, ended March 31, 2018, AP Company sales totaled
2,796.4 billion yen, an increase of 4% year-on-year, due to
increased sales from the AVC business in Europe and other
factors. Operating profit was 107.6 billion yen, an increase of 8%
year-on-year, as streamlining measures and gains on increased
sales of consumer electronics in China and Europe more than
offset the impact of lackluster sales in some regions of Asia and
sharp increases in raw material prices. The operating profit
ratio was 3.8%. Higher profits were achieved for the third
consecutive year. Further, sales of premium products in the
consumer electronics business continued to grow and this
contributed to increased sales and profits.
AP Company’s initiatives for future growth included
continuing to build a manufacturing-sales consolidated
management structure in order to conduct integrated
manufacturing and sales in key overseas regions and promoting the
market launch of localized products that incorporate differentiated
elements in line with the region in China, India and other parts
of Asia. Further, the company actively promoted open innovation,
which included collaborations with venture capital and universities.
37
Panasonic Annual Report 2018
Introduction
Growth Strategy
Foundation for Growth
Results for Fiscal Year
Ended March 2018
Future Strategy
Fiscal 2019 Policy and Strategy
AP Company will work in fiscal 2019 to generate sales of
2,950.0 billion yen, a year-on-year increase of 3%, led
largely by increased sales of air conditioners and white
goods. In terms of profits, it will strive for operating profit
of 121.0 billion yen, a year-on-year increase of 13%, and an
operating profit ratio of 4.1%, through an expanded line of
premium products in the consumer electronics business,
gains on increased sales in China, India and other Asian
regions, and further streamlining measures. This would
result in a fourth consecutive year of higher profits.
Consumer Electronics Business Strategy
AP Company, as the headquarters of the consumer
electronics business, will accelerate efforts to change its
business portfolio and strategies to achieve sustained
increases in sales and profit.
In terms of its business portfolio, the company will
accelerate a resource shift from AVC to air conditioner and
small/built-in appliance businesses. It will also focus on
China, India and other regions of Asia with high growth,
while maintaining its foundation in Japan, and thereby
achieve profitable business growth.
In terms of strategies, AP Company will promote the
further creation of premium products by introducing and
expanding “global platform product development.” A global
platform is a design concept in which design proceeds by
combining modules under a unified set of global standards.
Modules changed in line with market needs are designed
for regional optimization, and shared values and functions
are designed on a standard basis in order to reduce costs
and further raise development efficiency.
Regarding regional consumer electronics strategy,
in China, the company will strive for sales of 20.0 billion yuan
in fiscal 2021, and targeting China’s so-called “Xingui,”
households with annual income of 320,000 yuan or more,
will work to expand sales of premium products on the
themes of “healthy”, “relaxedly” and “dignity.” It will also
strengthen partnerships with major online commerce
platforms and further increase its ratio of online sales.
Moreover, the company intends to raise profitability by
building a system that enables original premium products,
like living space proposals, to be provided quickly.
In Asia, where sales slumped in certain areas due to
cooler summer weather, AP Company will promote more
premium products and further strengthen operations with
manufacturing and sales consolidated to flexibly
accommodate changes in supply-and-demand.
In India, where a new refrigerator plant went into operation
alongside air conditioner, television and washing machine
facilities, the company will pursue profitable growth through
local production and increased sales of localized products
that meet regional customer needs.
B2B Business Strategy
With strengths in energy-saving and environmentally
conscious products and IoT technologies, which are
helping society become carbon-free, AP Company will
establish a profit model that allows long-term, ongoing
transactions with its customers.
In the food retail & commercial equipment business, the
company will market differentiated products that utilize IoT,
such as smart lockers, expand the OPEX business for total
support through to operations and maintenance, and further
expand its lineup of natural refrigerant equipment.
In the commercial air conditioner business, AP
Company acquired sales companies and engineering firms
in the U.K. and Brazil the previous fiscal year. It will continue
to reinforce overseas sale channels and engineering
capabilities while also working to raise its marginal profit ratio
by expanding its lineup of new products.
In the household fuel cell business, for which the company
has a majority share in Japan, it will introduce new models
in Europe and develop new sales routes in order to
increase sales.
Medium-to-Long Term Policy and Strategy
With a view to fiscal 2021, AP Company will put even
more emphasis on profitability and aim for an operating
profit ratio of 5%. On the pillars of the air conditioner and
small/built-in appliance businesses, where high profits are
expected in particular, and of the food retail & commercial
equipment business, where the company will work to increase
profits in a stable manner, AP Company will work to
generate cash by accumulating profits at significant levels.
Localized Products that Meet Regional Needs,
in China and India
Business Portfolio
Business Category
and Investment Policy
AP Company Mid-term Plan (FY2017–19)
Invested capital
Sales
OP ratio
China
Refrigerator with
Internet connectivity
India
Washing machine
with curry stain
removal function
Accelerate
positive
investment
High-growth
business
Air conditioner
Small/built-in appliance
Major appliance
Reduce
investment
Stable-growth
business
Food retail & commercial
equipment
Devices
Low-profitable
business
AVC
Panasonic Annual Report 2018 38
Divisional Company Strategies
Eco Solutions Company
(ES Company)
Space Innovation business, which provides electrical
construction materials, housing materials and other
products, is pursuing high growth in priority regions overseas.
Lifestyle Innovation business, which is involved in
detached residences, urban development and other areas,
is working to achieve growth through Group synergies with
Panasonic Homes at the core.
Opportunities
Strengths
Issues
Please also refer to “Panasonic IR Day 2018 Eco Solutions Company Presentation materials” (PDF).
• Market expansion from high GDP
• Robust domestic distribution channels
growth in China, Southeast Asia and
ISAMEA (India, South Asia, and the
Middle East and Africa)
• Increase in large-scale development
projects due to Tokyo Olympic and
Paralympic Games and other factors
and sales networks for electrical
construction materials
• Accelerating growth in overseas
electrical construction materials
business
• Numerous contact points with
• Response to contraction of domestic
customers and marketing capabilities
such as stores offering remodeling
services and showrooms
• Ability to develop products that deliver
value in response to the diverse needs
of each country
construction market from 2021
• Profitable growth in the construction
business
Net Sales
(Based on new organization)
Operating Profit
(Based on new organization)
(Billions of yen)
2,100
1,957.4 2,061.0
(Billions of yen)
120
101.0
1,400
700
0
81.2
90
60
30
0
Market Environment (FY2019–21 CAGR*1)
Predicting market expansion on sustained GDP growth in main regions
Maintain high growth in ES Company’s three priority regions
Americas
+4%
Europe & CIS
+4%
China & Northeast Asia
+7%
ISAMEA*2
+11%
Southeast Asia and Oceania
+8%
3/’18
3/’19
(Forecast)
3/’18
3/’19
(Forecast)
(Years ended/ending March 31)
(Years ended/ending March 31)
*1 Weighted averages of the countries’ nominal GDP growth rates based
on the Panasonic sales composition ratio
*2 India, South Asia, and the Middle East and Africa
Fiscal 2018 Performance
(Based on Previous Organization)
For details, refer to page 86
Future Strategy
Achieved Increased Sales and Profits
Fiscal 2019 Policy and Strategy
Net sales in fiscal 2018, ended March 31, 2018, totaled
1,623.5 billion yen, a year-on-year increase of 5%, due to
major growth in the electrical construction materials
business, primarily overseas, and operating profit increased
13% year-on-year to 72.5 billion yen, for increases in both
sales and profits.
In fiscal 2019, ES Company is projecting net sales of
2,061.0 billion yen, a year-on-year increase of 5%, due
largely to active expansion of the electrical construction
materials business, including lighting equipment and wiring
devices, in China, India and Southeast Asia, and operating
profit of 101.0 billion yen, a year-on-year increase of 24%.
39
Panasonic Annual Report 2018
Introduction
Growth Strategy
Foundation for Growth
Results for Fiscal Year
Ended March 2018
Medium-to-Long Term Policy and Strategy
Overseas, the three focus regions are China, ISAMEA
(primarily India), and Southeast Asia, and these regions are
projected to maintain high market growth. In Japan, both
new residential starts and non-residential starts are
expected to decline slightly through 2020, and then market
contraction is expected from 2021.
Given this outlook, ES Company, guided by a mission of
“Expand ‘A Better Life’ to home, town and society,” and a
vision of “Make a better, comfortable ‘life’ with human
oriented solutions,” and with Panasonic beginning its next
100 years, has redefined its B2B2B/C (electrical
construction materials / housing materials) business as
the “Space Innovation business” and its B2C business as
the “Lifestyle Innovation business” to further increase the
value it provides while maintaining its business groupings.
The company’s management goals are net sales of 2,270.0
billion yen and an operating profit ratio of 5.5% in fiscal
2021. With the overseas business as its growth driver, ES
Company will work to significantly increase overseas sales
from 325.0 billion yen in fiscal 2018 to 500.0 billion yen in
fiscal 2021.
Strategy of Space Innovation Business
For the overseas electrical construction materials business,
resources will be concentrated into three focus businesses
(Lighting, Energy Systems and Ecology Systems) in three
focus regions (China, ISAMEA and Southeast Asia) with
the goal of generating profitable sales growth. For Energy
Systems, high-function wiring devices and other strategic
products will be launched in India, and home distribution
board solutions will be rolled out as a new business.
In Southeast Asia, the wiring device lineup will be expanded
and the breaker business strengthened. In addition, wiring
devices, which have a large market share in India and
Turkey, will also be unrolled on African markets with the
goal of being No. 1 globally. For Lighting, ES Company in
China will promote expansion of the e-commerce business
and sales growth for high-function products. In Southeast
Asia and India, sales activities directed at commercial
facilities, factories and offices will be reinforced in line
with expanded sales channels. For Ecology Systems
business, ES Company plans to develop new markets and
sales channels in China, including regional cities and
non-residential markets.
Further, ES Company will search for regional partners
(such as developers) that can combine Panasonic products
and businesses with local needs in each country in order
to thereby accelerate the B2B solutions business.
In the domestic electrical construction materials business,
ES Company will further strengthen its market advantage,
and in the non-residential sector will capture rampant
construction demand centering on the Tokyo metropolitan
area, which includes demand associated with the
upcoming Tokyo Olympics. In addition, for the renovation
market, ES Company aims to generate sustained profit by
expanding the engineering business through reinforcing
system integration functions. Further, with a view to 2021 and
beyond, preparations will be accelerated for space innovation
that provides new solutions and new experiential value
through the linking of “light,” “sound,” “image” and “air.”
Strategy of Lifestyle Innovation Business
In the construction business, with Panasonic Homes, which
was made a wholly owned subsidiary in fiscal 2018, at the
core, ES Company will seek to achieve profitable sales
growth by creating Group synergies and focusing on not
only conventional medium-class to high-end residences
but also popular price-range residences, multi-storied
residences and urban development including non-residences.
Specifically, with regard to popular price-range
residences, ES Company intends to strengthen its
wooden residence business through collaboration with the
Housing Systems Business Division, which has know-how
in building frame related materials. It will also reinforce
construction capabilities through coordination with
Panasonic’s integrated general contracting function, which
includes Matsumura-Gumi Corp., made a consolidated
subsidiary in fiscal 2018, and further expand the urban
development business, including non-residences.
For the growth of Lifestyle Innovation business, ES
Company will provide residences and towns where new
value can be experienced through the utilization of our
advanced technologies, one of Panasonic’s strengths.
Through this, ES Company will enhance the presence of
Panasonic Homes and at the same time quickly realize
space value as a showcase. This will be wide-ranging
promotions aimed at consumers, builders, general
contractors and others, thus, Space Innovation business
will create a positive cycle that further expands overall
sales of Panasonic products.
Business Composition and Portfolio
Space Innovation business
Lifestyle Innovation business
• Lighting
• Energy Systems
• Panasonic Ecology
Systems
• Housing Systems
Electrical
construction
materials
Housing materials
• Panasonic Homes
• Construction Solution
Business
• Panasonic Cycle Technology
• AGE-FREE
Construction
Overseas
electrical
construction
materials
Stable-growth
Domestic
electrical
construction
materials
Stable-growth
Profitable sales growth
Create sustainable profits and prepare
for new space innovation
Housing
materials
Low-
profitable
Profit
improvement
Construction
Profitable sales growth
Stable-growth
400
Sales
(Billions of yen)
800
o
i
t
a
r
t
i
f
o
r
p
g
n
i
t
a
r
e
p
O
0%
Note: The size of the circle is proportional to the amount of operating profit.
Overseas and domestic electrical construction materials do not include solar.
Panasonic Annual Report 2018 40
Divisional Company Strategies
Connected Solutions
Company (CNS Company)
CNS Company will work to address social issues and
establish “Gemba Process Innovation*” in order to provide
solutions to corporate customers for issues in frontline
business operations and processes through its core devices
and advanced technologies.
* Improving productivity and continuously generating value on operational frontlines
Please also refer to “Panasonic IR Day 2018 Connected Solutions Company Presentation materials” (PDF).
Opportunities
Strengths
Issues
• Expanding needs for automation and
• Comprehensive capabilities to address
• Business model reform for sustainable
labor saving in industrial fields against a
backdrop of social issues
- Labor shortage due to an aging society and
lower birth rate and soaring labor costs,
primarily in advanced countries
- Surging freight traffic and increasingly
complex operational frontlines due to the
progress of e-commerce
• Advances in Industry 4.0, AI/IoT utilization
• Increase in number of large-scale
development projects brought about by the
Tokyo 2020 Olympic and Paralympic Games
B2B customer management issues in an
all-Panasonic manner
high-profit business structure
- Convert from individual products and
• Expertise cultivated in manufacturing sector
• Strong, differentiated technical capabilities
hardware to solutions business
- Construct overseas solutions base
(image recognition, automation
technologies, etc.)
• Product development, strong core devices
• Engineering system integration, customer
base and sales capabilities that underpin
solutions businesses in Japan
Net Sales
(Based on new organization)
(Billions of yen)
1,200
1,110.4 1,093.0
Operating Profit
(Based on new organization)
(Billions of yen)
120
103.6
900
600
300
0
83.0
90
60
30
0
Global e-Commerce Market
(Trillions of dollars)
Explosive expansion and increased complexity
of logistics due to further e-commerce development
25
20
15
10
5
0
3/’18
3/’19
(Forecast)
3/’18
3/’19
(Forecast)
’16 ’17 ’18 ’19 ’20 ’21 ’22 ’23 ’24 ’25 ’26 ’27 ’28 ’29 ’30
(Years ended/ending March 31)
(Years ended/ending March 31)
Source: Panasonic estimate based on eMarketer’s forecasts
Fiscal 2018 Performance
(Based on Previous Organization)
For details, refer to page 86
Higher Sales and Profits for First Time in Two Years
Net sales in fiscal 2018, ended March 31, 2018, totaled
1,119.3 billion yen, an increase of 6% over the previous
fiscal year, due to Zetes Industries S.A. (Zetes), a Belgian
logistics solutions company, being added to the scope of
consolidation, as well as to increased sales of notebook
PCs and mounting equipment for the ICT and automotive
industries. Operating profit totaled 105.7 billion yen, a
year-on-year increase of 110%, and the operating profit ratio
was 9.4%. Higher sales and profits were achieved for the
first time in two years.
In addition, in fiscal 2018, CNS Company promoted the
provision of high added-value solutions, such as automation
solutions for immigration procedures at airports using facial
recognition technology and projection mapping using
high-brightness projectors. It also created the “μSockets”
IoT service using advanced core technologies and B2B
system provision know-how cultivated for many years on
the business frontlines.
41
Panasonic Annual Report 2018
Introduction
Growth Strategy
Foundation for Growth
Results for Fiscal Year
Ended March 2018
Further, CNS Company headquarters was relocated from
Osaka to Tokyo. It is being unified to maximize customer
touchpoints and accelerate joint creation. Reforms are also
being promoted to change to a flat corporate culture that is
capable of quick business engagement.
Future Strategy
Fiscal 2019 Policy and Strategy
Net sales in fiscal 2019 are projected to be 1,093.0 billion
yen, a decrease of 2% year-on-year, and operating profit is
expected to total 83.0 billion yen, a decrease of 20% year-
on-year, due in part to lower avionics sales and profits.
Overall declines in sales and profits are being predicted
because in-flight entertainment and connectivity systems
are expected to struggle due to falling demand for large
aircraft, and this will have a major impact on the avionics
business. However, CNS Company will strive to achieve
growth by further strengthening other businesses and
expanding into the solutions business.
New initiatives will include, in avionics first of all, building
a new integrated platform by leveraging three strengths
already possessed by the business, hardware, satellite
communications and the cloud, and working to expand the
in-flight entertainment and connectivity business by broadly
meeting the needs of airline companies. CNS Company will
also promote its digital solutions and service business and
repair and maintenance business. While lower sales and
profits are forecast for fiscal 2019, over the medium
term, stable growth is expected.
In the area of process automation, ICT industry investment
is expected to decline more than in fiscal 2018, so a slight
drop in sales is projected for fiscal 2019, but CNS Company
will work to increase profits by focusing on expanding
sales of overall factory process improvement and
proposal services through its partnership with Siemens and
of arc-welding systems and laser-welding systems, which
help raise automotive industry productivity.
For the media entertainment business, CNS Company
plans to accelerate the provision of solutions for the
entertainment and education industries with mainstay
products at the core, including high-brightness projectors,
production cameras and remote cameras.
In mobile solutions, the company will globally expand
supply chain solutions with Zetes at the core.
Panasonic System Solutions Japan Co., Ltd. (PSSJ) will
focus on acquiring orders for projects related to the Tokyo
Olympic and Paralympic Games ahead of 2020 and
increasing sales to its three priority industries, public
services, logistics/ distribution, and social infrastructure
systems.
Medium-to-Long Term Policy and Strategy
Until now, “push” businesses, in which quality products
were manufactured and distributed in large quantities, were
the mainstream. Going forward, however, the demand is for
“pull” businesses, in which products that meet individual
customer needs are individually delivered; in other words,
what will be needed is supply chains with the customer as
the starting point. At the same time, operational frontlines
are becoming more complex with the explosive increase
in logistics volume caused by the further development of
e-commerce, but securing an adequate labor force has also
become difficult. Given these circumstances, Panasonic’s
corporate customers have begun to want not only simple
manpower- and labor-saving benefits but also changes to
overall processes across various worksites for higher
operational productivity and added value. Panasonic will
therefore promote “Gemba Process Innovation” to
accommodate these needs. Specifically, the initiative will
mobilize expertise in production management methods and
frontline process improvements cultivated in manufacturing,
differentiated technologies such as sensing, image
recognition, and robotics, and experience and knowledge
of operational frontlines cultivated at customer sites. It will
also support the frontline operations of customers through
automation and streamlining of individual processes and
comprehensive process management, allowing CNS
Company to assist in a way that goes beyond delivering
products.
By accelerating this “Gemba Process Innovation” and
acquiring needed capabilities (software services, etc.),
including through M&A, to build a global solutions base,
CNS Company will strive to establish a sustainable
high-profit business structure.
Gemba Process Innovation in Supply Chain Field
Leverage know-how cultivated in manufacturing,
robotics and other resources to innovate customer
processes for production, transporting and selling
Manufacturing
Logistics
Distribution
Produce
Transport
Sell
Digital
Process innovation across value chains
Data
s
r
e
m
u
s
n
o
C
Gemba
Robotics/next-generation
communications/image processing/sensing,
etc.
Know-how
in manufacturing
Differentiated
technology
operational frontline
knowledge and
experience
Panasonic Annual Report 2018 42
Divisional Company Strategies
Automotive & Industrial
Systems Company
(AIS Company)
Focusing on two mainstay businesses, automotive and
industrial systems, AIS Company contributes to the creation of
safe, comfortable societies. In Automotive Business in
particular, with cars continuing to evolve in response to demands
from society and against a background of tightening in
environmental regulations worldwide, we are promoting active
investment and intend to drive growth for Panasonic as a whole.
Please also refer to “Panasonic IR Day 2018 Automotive & Industrial Systems Company Presentation materials” (PDF).
Opportunities
Strengths
Issues
• Computerization/digitalization of cars
(connected cars, advanced driver
assistance system (ADAS))
• Shift in demand from gasoline-powered
cars to eco-cars (more stringent
environmental controls)
• IoT utilization, labor-saving measures in
industrial fields
• Group’s technological assets cultivated
• Response to accelerating car evolution,
in digital consumer electronics and
mobile phones (image processing, image
recognition, wireless communications,
cyber security, etc.)
• Technology development and stable
supply capabilities for batteries that
boast high capacity and high reliability
• Devices with high market shares
underpinned by proprietary technologies
including CASE*
• Maintaining/raising competiveness of
automotive batteries and response to
sharply rising raw material prices
• Development from sales of individual
devices to system proposals and other
new businesses and services
* An acronym for Connectivity, Autonomous,
Shared, Electric.
Net Sales
(Based on new organization)
Operating Profit
Operating Profit
(Based on new organization)
(Based on new organization)
(Billions of yen)
3,000
2,803.9
3,000.0
(Billions of yen)
(Billions of yen)
150
136.0
2,000
1,000
0
100
93.4
50
0
Toward Achievement of 2.5 Trillion Yen in Automotive Business Sales
Automotive business sales
(Trillions of yen)
Striving to become one of the world’s top 10 automotive
components manufacturers
2.5
1.0
1.7
1.8
2.0
1.3
Current mid-term
management plan
Next mid-term
management plan
3/’13 3/’17 Annual growth rate +7%
3/’17 3/’22 Annual growth rate +14%
3/’18
3/’19
(Forecast)
3/’18
3/’19
(Forecast)
3/’13 3/’14 3/’15 3/’16 3/’17 3/’18 3/’19 3/’20
(Forecast)
(Forecast)
3/’22
(Forecast)
(Years ended/ending March 31)
(Years ended/ending March 31)
(Years ended/ending March 31)
Fiscal 2018 Performance
(Based on Previous Organization)
For details, refer to page 87
Increase in Business Profitability
In fiscal 2018, Automotive Business, Energy Business and
Industrial Business all recorded increased sales, and net
sales totaled 2,803.5 billion yen, an increase of 16% over
the previous fiscal year. Operating profit declined from the
previous fiscal year to 91.4 billion yen, a year-on-year
decrease of 2%, in reaction to posting gains on reversal
related to legal affairs and gains on business transfer in the
previous fiscal year. However, profit created from businesses
excluding these impacts increased by over 30.0 billion yen
from the previous fiscal year.
In fiscal 2018, AIS Company also steadily conducted
initiatives aimed at future growth. In Automotive Business,
the company commenced a public road demonstration
experiment of autonomous driving cars. In Energy
Business, it began examining the possibility of collaborating
with Toyota Motor Corporation (Toyota) for the further
evolution of automotive prismatic type lithium-ion batteries.
The Dailan factory in China also started mass production
of automotive prismatic type lithium-ion batteries, the new
Morocco factory of Ficosa International, S.A. (Ficosa)
43
Panasonic Annual Report 2018
Introduction
Growth Strategy
Foundation for Growth
Results for Fiscal Year
Ended March 2018
opened to increase production of automotive cameras for
European markets, and a motor factory in Zhuhai, China
was expanded, as the company worked to bolster production
capacity to meet rampant demand.
Future Strategy
Fiscal 2019 Policy and Strategy
In fiscal 2019, AIS Company will steadily translate
large-scale investment made thus far into growth and drive
the sales and profit growth of Panasonic overall. It is aiming
for increased sales, in real terms excluding the effects of
exchange rates, in all of its businesses, starting with
Energy Business, where automotive batteries will grow
significantly, and including Automotive Business and
Industrial Business, and will aim to achieve net sales of 3
trillion yen, an increase of 7% compared to the previous
fiscal year. The company will work for operating profit of
136.0 billion yen, an increase year-on-year of 46%, from
gains on increased sales of automotive batteries in Energy
Business, increased profits from automotive and industrial
devices in Industrial Business, and profit improvement in
semiconductors and LCD panels, and will strive for an
operating profit ratio of 4.5%.
Regarding the main initiatives of each business, first of all, in
Business Group Strategies
Automotive Business, AIS Company will work for further
business growth centering on its key categories of in-vehicle
infotainment (IVI) systems, cockpit products, advanced driver
assistance systems (ADAS), and electric mechanisms. In fiscal
2019, Automotive Business will aim to achieve higher sales
and higher profits, in real terms excluding the effects of
exchange rates, by expanding the vehicle models for which
high-added-value products, including IVI and cockpit products,
are delivered and by further increasing development efficiency.
New products like electronic mirrors and communication units
will also contribute to increased sales, as an effect of
collaborating with Ficosa, which was made a consolidated
subsidiary in fiscal 2018.
In Energy Business, the organization was restructured by
customer and industry as of April 2018 to further reinforce
the operating base. For automotive batteries, AIS Company
is projecting a major increase in sales of both cylindrical
and prismatic batteries as a result of working to increase
production timed to demand from priority customers and to
further increase capacity utilization. While results will be
impacted by increased fixed costs, including personnel
expenses and equipment depreciation expenses from
large-scale investment, and by sharply increasing prices for
materials such as cobalt and lithium, it aims to increase
profit on gains from higher sales of automotive batteries,
streamlining measures, and other factors.
In Industrial Business, the company will work for even
higher profitability in electromechanical control, device solutions
and electronic materials, its core businesses. Specifically, it will
Automotive Business
Energy Business
Industrial Business
Net sales (Billions of yen)
Operating profit ratio (%)
Figures in parentheses
are year-on-year
3.4%
Net sales (Billions of yen)
Operating profit ratio (%)
4.7%
Figures in parentheses
are year-on-year
Excluding the effects
of foreign currency
exchange rates
(+2%)
928.8
(+38%)
922.7
(–1%)
671.6
2.0%
562.5
(+14%)
493.6
3.8%
758.0
(+35%)
Net sales (Billions of yen)
Operating profit ratio (%)
Figures in parentheses
are year-on-year
4.4%
5.7%
945.2
(+9%)
984.1
(+4%)
870.8
Fundamental businesses
Electromechanical Control Business Division
Device Solutions Business Division
Electronic Materials Business Division
Businesses to be turned around
PSCS, PLD*
3/’17
3/’18
3/’19
(Forecast)
3/’17
3/’18
3/’19
(Forecast)
3/’17
3/’18
3/’19
(Forecast)
Net Sales Composition Ratio (%)
Net Sales Composition Ratio (%)
Net Sales Composition Ratio (%)
Four Categories
Others
Automotive
Industrial
Others
Automotive
Industrial
Others
14%
27%
33%
29%
30%
3/’17
3/’19
Four key categories (IVI, cockpits, ADAS,
and electric mechanisms) fully contribute
to a sales increase.
29%
3/’17
54%
26%
3/’19
36%
3/’17
45%
3/’19
Accelerating the shift to automotive-
and industrial-use areas; launch full-scale
operations at large-scale automotive battery
factories contributing to increased profit.
Continue to expand sales and profits by
further increasing the ratio of automotive
and industrial businesses.
*PSCS: Panasonic Semiconductor Solutions Co., Ltd.;
PLD: Panasonic Liquid Crystal Display Co., Ltd.
(Years ended/ending March 31)
Panasonic Annual Report 2018 44
Divisional Company Strategies
strive to expand profits by increasing sales of industrial
products like servo motors and high-function multi-layer circuit
board materials and of EV relays and passive components
for automotive applications. For semiconductors and LCD
panels, businesses to be turned around, the company will
endeavor to improve marginal profit by streamlining, raising
yields and revamping the product mix toward profitability in
fiscal 2020.
With respect to capital investment, in fiscal 2018,
investment of over 200.0 billion yen was made, centering
on investment in Panasonic’s Nevada factory, which is inside
the Gigafactory of U.S.-based Tesla Inc. (Tesla) However,
sales increases by the Nevada factory lag behind by a fiscal
year, so the company has worked to control depreciation
expenses and minimize the impact on income and
expenditure through measures such as delaying the facility’s
operating period. In fiscal 2019 as well, AIS Company is
planning investment of 241.0 billion yen, primarily in
automotive battery factories in Nevada, Dalian and Himeji. It
will strive to meet skyrocketing demand and minimize risk by
carefully monitoring customer production plans and demand
trends and by making staged investments.
Medium-to-Long Term Policy and Strategy
Toward Automotive Business Sales of 2.5 Trillion Yen
AIS Company’s Automotive Business is expected to be
able to achieve net sales of 2 trillion yen in fiscal 2020,
primarily due to increased sales of automotive batteries. It
is also aiming for net sales of 2.5 trillion yen in fiscal 2022
and will endeavor to become one of the world's top 10
manufacturers of automotive components. During the
five-year period from fiscal 2017 to fiscal 2022, the
Mid-Term Growth Scenario
business will grow substantially, at an annual rate of 14%,
exceeding the company’s effective demand (annual growth
of +8%).
Mid-Term Growth Scenario for Automotive Business
In Automotive Business, AIS Company will continue to
focus on the four key categories of IVI, cockpit products,
ADAS and electric mechanisms.
For cockpit systems, which started being shipped in fiscal
2018, it will work to propose systems that are combined
with IVI to thereby steadily increase orders. For ADAS, it
will utilize image processing and synthesis technologies
cultivated in the digital AV business to capture orders for
advanced driver assistance system with sensing cameras
and sonar in the low-to-medium speed range and will
actively work to acquire orders for more advanced
systems, such as autonomous parking systems. For
electric mechanisms, the company will work to expand
the business through overseas development of
automotive battery chargers, which have a track record in
Japan, and by acquiring new orders for products such as
electric power train systems for compact electric vehicles.
Further, utilizing these automotive systems, AIS Company
will continue planning commercialization of new services
required of the mobility society, taking into account all
people and objects that move.
Mid-Term Growth Scenario for Energy Business
Demand for automotive batteries has been increasing rapidly
with the spread of electric vehicles. In response to this
sharp growth in demand, AIS Company will not pursue
market share but rather will put even more emphasis on
profitability and reliable investment returns as it makes
staged investment in its factories in Japan, the U.S. and
Automotive Business
Energy Business
Contribute to the evolution of cars through the four key
categories of “IVI, cockpits, ADAS, and electric mechanisms.”
Take up challenges for new service businesses in a mobility
society.
Reinforce “manufacturing” and contribute to the proliferation of
electric vehicles.
Take up challenges related to “using” to create new demand.
Sales growth /
operating profit ratio (%)
Size of circle: sales scale
o
i
t
a
r
t
i
f
o
r
p
g
n
i
t
a
r
e
p
O
3/’22
5%
3/’19
¥922.7 billion
4.7%
3/’18
¥928.8 billion
3.4%
100
110
120
Sales index (3/’18: 100)
45
Panasonic Annual Report 2018
Achieve profit growth by focusing
on four key categories
• Increase market share through
integrated “IVI + cockpit” systems.
• Expand businesses by building a
track record of receiving orders and
mass production of low-speed ADAS
and electric mechanisms.
Take up challenges for new
service businesses
• Contribute to mobility services linked
to hardware.
Expand areas where contributions
are made to transporting
people/objects
- Integrated cockpits
×
- ADAS/Autonomous driving
×
- EV/electric mechanisms
Sales growth /
operating profit ratio (%)
Size of circle: sales scale
3/’22
o
i
t
a
r
t
i
f
o
r
p
g
n
i
t
a
r
e
p
O
5%
3/’19
¥758.0 billion
3.8%
3/’18
¥562.5 billion
2.0%
100
200
Sales index (3/’18: 100)
Reinforce “manufacturing”
• Respond to dynamic automotive
battery demand while ensuring reliable
investment recovery.
Himeji: Start mass production during
FY2020 and expand thereafter.
(prismatic types)
Nevada: Toward more than
35 GWh/year (cylindrical types)
Dalian: Increase production lines
by customer. (prismatic types)
Take up challenges related to “using”
• Make new contributions in the area of
information infrastructure
• Build new ecosystems with partners
Create new battery demand
- Data center backup power
supplies
- Base station power supply,
remote monitoring service
- Battery sharing
Introduction
Growth Strategy
Foundation for Growth
Results for Fiscal Year
Ended March 2018
China. With the shift to electric vehicles and entry of new
manufacturers accelerating, in part due to stronger
environmental and fuel economy restrictions in countries
and regions around the world, Panasonic intends to deepen
relationships with leading customers that understand the
superior qualities of Panasonic batteries, share its values
and are willing to share a portion of the risk involved. Based
on this thinking, as of the present, the company delivers
automotive batteries to 12 top-running customers, starting
with Tesla and Toyota. On the strength of this track record,
AIS Company intends to further grow its automotive battery
business. To this end, it plans to remain committed to the
development of both cylindrical and prismatic type
products and continue to evolve its automotive batteries
to meet customer requirements and further raise their
world-leading performance level.
The company will also expand battery sales for
non-automotive applications. For example, Panasonic’s
power storage systems, which are highly regarded for
reliability and lifespan, are being adopted globally in
applications such as backup power sources for data centers
and base stations, and the company will work for further
growth over the medium term. It will also strive to create
new businesses, including remote battery monitoring and
battery sharing.
Mid-Term Growth Scenario for Industrial Business
In Industrial Business, AIS Company will focus resources
on devices that support the three fields of labor saving,
information and communications infrastructure, and
automotive electric systems, where societal demand is strong.
For labor saving, system proposals will be promoted for
core components like servo motors and sensors that support
automation. For information and communications
infrastructure, the company will maintain its dominant
share for conductive capacitors and multi-layer circuit
board materials, which leverage proprietary materials
technologies, and pursue high profits. In automotive
electric systems, the power control unit business, which
pivots on device strengths such as EV relays, will be
promoted along with efforts to increase sales of devices
highly regarded by customers, such as inductors.
Toward Fiscal 2031
AIS Company in fiscal 2018 was able to return to an
upward sales trend from its recent downtrend, as increased
sales from automotive and industrial related businesses
outstripped the declines in existing businesses such as
information and communications technology (ICT).
Moreover, it achieved higher profit by not simply selling
products but by listening closely to customers and proposing
the products as systems to address their concerns.
Going forward, AIS Company will continue to grow by
partnering with top-running, industry-leading customers,
developing industry-leading products with distinctive
proprietary technologies, and proactively making
investments. With a multitude of business opportunities,
the company will focus on areas where its characteristics
and strengths can be leveraged and concentrate its
resources in order to steadily achieve profitable growth.
While keeping at its core the automotive and industrial
fields to which it’s committed, AIS Company will seek to
create new business fields and generate further growth.
Energy Business (Automotive Batteries)
Industrial Business
Deepen partnerships with “top runner” customers.
Further evolve “the world’s No. 1 batteries” (cylindrical and
prismatic types)
Achieve stable growth by concentrating on “labor saving,”
“information communication infrastructure,” and “automotive
electric systems,” whose demands are strong in the society.
Pursue high profitability through “modularization” and “runaway
high market share” based on competitive devices.
Deepen customer relationships
Collaborate as a “partner,” rather
than as a “supplier”
Tesla / Toyota
Increase transactions with
“top runner” customers
68
18
50
74
16
58
Vehicle models using
Panasonic batteries
Japanese companies:
6 companies,
29 models
US companies:
2 companies,
14 models
European companies:
4 companies,
15 models
3/’17 3/’18
(Years ended
March 31)
Delivered
Order received
Underway
Lead the industry through
product competitiveness
Superiority of Panasonic batteries
High safety levels and product
development suited to the application
Prismatic types
For HV: High output
For PHV and EV: High capacity
Cylindrical types
For EV: High energy
density
High
y
t
i
s
n
e
d
t
u
p
t
u
O
Low
Low
Energy density
High
Further evolution
New material development
(prismatic types / cylindrical types)
Industry-leading energy density
(increase nickel ratio, optimize cobalt ratio)
New structure development
(prismatic types)
Improving safety and capacity per volume
Sales growth /
operating profit ratio (%)
Size of circle: sales scale
Labor-saving factories
• Increase customer value through core
components that support automation.
3/’22
Industrial devices
10%
o
i
t
a
r
t
i
f
o
r
p
g
n
i
t
a
r
e
p
O
3/’19
¥984.1 billion
5.7%
3/’18
¥945.2 billion
4.4%
Information communication
infrastructure
• Expand for base stations and data
centers leveraging unique technologies.
Multi-layer circuit board materials /
Conductive capacitors
Automotive (electric mechanisms,
autonomous driving)
• Increase automotive modules with
competitive devices at the core.
Automotive power control units
100
110
130
• Highly reliable technologies that
continue to be the choice of customers.
Sales index (3/’18: 100)
Inductors
Panasonic Annual Report 2018 46
Divisional Company Strategies
Main Products and Services by Business Division (As of April 1, 2018)
Appliances
Company
Air-Conditioner Company
Air-conditioners for home, office and store use, multi-unit air-conditioners
for buildings, gas heat pump air-conditioners, absorption chillers, and CO2
heat pump hot water supply systems
Air-conditioners
TV Business Division
TVs
Imaging Network Business Division
Digital cameras and digital video cameras
Home Entertainment Business Division
Blu-ray and DVD recorders, audio equipment, and portable TVs
Communication Products Business Division
Cordless telephones/faxes, home network systems, and intercoms
Hair dryer
Eco Solutions
Company
Lighting fixtures
Smart City Shioashiya
Lighting Business Division
Lighting equipment (for residential, facility, outdoor, store etc.), lighting
devices, and lamps
Energy Systems Business Division
Wiring devices, home distribution boards, electric tool, condominium HA,
HEMS/BEMS, and solar photovoltaic systems
Connected
Solutions
Company
In-flight
entertainment systems
Integrated line
control systems
Panasonic Avionics Corporation
In-flight entertainment and connectivity systems, digital solutions &
services, and repairs and maintenance services
Process Automation Business Division
Chip mounters, screen printers, FPD bonders, electronic component
insertion machines, welding-related systems, lasers, and integrated line
control systems
Automotive Infotainment Systems Business Division
IVI, cockpit systems, car navigation systems, car AV
systems, and car speakers
Automotive Electronics Systems Business Division
On-board charging systems, camera modules, and back & corner sensors
Ficosa International, S.A.
Automotive mirrors, shifter systems, and communication modules
Automotive &
Industrial Systems
Company
Cockpit
systems
Lithium-ion batteries
Servo motors
47
Panasonic Annual Report 2018
Introduction
Growth Strategy
Foundation for Growth
Results for Fiscal Year
Ended March 2018
Refrigerator Business Division
Refrigerators and freezers
Laundry Systems and Vacuum Cleaner Business Division
Washer/dryers, clothes dryers, vacuum cleaners, and hygiene toilet seats
Kitchen Appliances Business Division
Induction heating (IH) cooking equipment, microwave ovens, rice cookers,
built-in cooking appliances, and dishwashers
Beauty and Living Business Division
Beauty appliances (shavers, hair dryers, oral care products, etc.), health
enhancing products (blood pressure monitors, body composition meters,
massage chairs, etc.), cooking appliances (home bakeries, coffee makers,
juicers, etc.), electric irons, hearing aids, and nanoe devices
Refrigeration and Air-Conditioning Devices Business Division
Air-conditioner compressors, refrigeration compressors, and vacuum
insulation materials
Smart Energy System Business Division
Smart gas meter-use devices and fuel cells
Cold Chain Business Division
Showcases, commercial-use refrigerators and freezers, ice-making
machines, drink vending machines, and kitchen equipment
Hussmann Corporation
Commercial-use refrigerated and freezer display cases
Panasonic Ecology Systems Co., Ltd.
IAQ-related equipment (ventilation systems, ceiling fans, and air purifiers)
and Environmental Systems and Engineering (purifying systems of water,
air and soil)
Housing Systems Business Division
System kitchens, system bathrooms, tankless toilets, interior doors, floor
materials, delivery boxes, drainpipes, and roof materials
Panasonic Homes Co., Ltd.
Low-rise detached residences, multistoried residences, renovation, and
urban development
Panasonic Cycle Technology Co., Ltd.
Power-assisted bicycle and electric motor unit
Media Entertainment Business Division
Projectors, professional displays, audio systems, and professional
broadcasting equipment
Mobile Solutions Business Division
PCs, tablets, payment systems, and supply chain solutions
Panasonic System Solutions Japan Co., Ltd.
Development of system solutions (public systems, social systems,
logistics/distribution, etc.); system integration, installation, operation and
maintenance
Security Systems Business Division
Surveillance cameras and recorders, video analysis solutions, industrial &
medical cameras, and mobile camera systems for police
Energy Device Business Division
Dry batteries, nickel metal-hydride rechargeable batteries, and micro
batteries
Electromechanical Control Business Division
Relays, connectors, switches, automotive power supplies, motors, and FA
sensors
Energy Solutions Business Division
Small lithium-ion batteries, battery modules for storage, and power storage
systems
Tesla Energy Business Division
Automotive/power storage cylindrical type lithium-ion batteries
Automotive Energy Business Division
Automotive prismatic-type lithium-ion batteries and automotive nickel
metal-hydride rechargeable batteries
Panasonic Semiconductor Solutions Co., Ltd.
IC/LSI, image sensors, compound semiconductors, and lead frames
Device Solutions Business Division
Conductive polymer capacitors, resistors, inductors, and inertial sensors
Electronic Materials Business Division
Electronic circuit board materials, plastic molding compounds,
encapsulation materials, and advanced films
Panasonic Liquid Crystal Display Co., Ltd.
IPS liquid crystal display panel
Panasonic Annual Report 2018 48
A Message from the Chairman of the Board
We will upgrade the governance
function to address changes in our
business environment
Shusaku Nagae
Director, Chairman of the Board
49
Panasonic Annual Report 2018
IntInttn rod
duction
Growth Strategy
Foundation for Growth
Results for Fiscal Year
Ended March 2018
Promoting continuous governance reform
Incorporating diverse external perspectives
in the Company’s management
Corporate governance at Panasonic is comprised of
two broad functions. In principle, executive officers
including the president are responsible for the
executive function, which entails carrying out
day-to-day operations. Led by the Chairman, the
Board of Directors is responsible for the supervisory
and corporate strategy decision-making function.
In order to enhance the effectiveness of corporate
governance, steps have been taken to reform the
Company’s governance structure and systems.
Turning to the Board of Directors, we reduced
the number of directors from 17 to 12 and raised
the minimum ratio of outside directors to one third
in fiscal 2018. Working to increase the Board’s
agility and transparency, while injecting a higher
degree of objectivity, we also implemented other
measures including the appointment of one
non-Japanese director in fiscal 2019.
Coinciding with the start of Japan’s version of
the Corporate Governance Code, the Company
established the optional Nomination and
Compensation Advisory Committee in fiscal 2016.
In response to inquiries from the Board, this
committee deliberates and reports on the
appropriateness of director and other officer
candidate nominations as well as their
compensation system. In the next fiscal year,
we worked to reinforce the role of the committee.
This includes ensuring that a majority of the
Nomination and Compensation Advisory Committee
is comprised of independent outside directors.
Against the backdrop of substantial changes in
the Company’s business environment and growing
focus on achieving sustainable development goals
(SDGs), expectations toward the corporate sector’s
efforts to address social issues are increasing.
Looking ahead, we will make every effort to respond
appropriately to a wide range of developments
while working to reform our governance structure
and systems on an ongoing basis.
Activities Aimed at Strengthening Governance
In addition to the structure and systems necessary
to allow management to make timely and decisive
decisions, corporate governance provides the
checks and balances that help prevent any
reckless action by management while preventing
any departure from accepted corporate practice
by the organization as a whole. It is within this
context, that I hold high expectations of our
outside directors as well as outside Audit &
Supervisory Board members (A&SB members).
At the Board of Directors meeting, we receive
insightful questions and comments on each
agenda item from our outside directors as well
as outside A&SB members based on their
experience and expertise in specialist fields. In
this sense, the Board of Directors meeting is
conducted through lively deliberation and
debate. Moreover, every effort is being made to
further energize the Board of Directors. This
includes newly allotting the time necessary to
discuss medium-to-long term strategies based
on the opinions of outside directors as well as
outside A&SB members on the effectiveness of
the Board of Directors.
Outside directors as well as outside A&SB
members began visiting business sites from
fiscal 2017. The aim is to provide outside
directors as well as outside A&SB members
with first-hand experience and a better
understanding of the manufacturing frontlines.
Through this initiative, outside directors as well
as outside A&SB members are engaging in
active dialogue with onsite employees.
In addition to adopting a logical approach that
draws on Group-wide internal input, we believe
we can realize management through collective
wisdom that is powered by the ideas and skills
of each and every employee based on the
multi-faceted perspectives of outside directors
as well as outside A&SB members.
FY2014
FY2015
FY2016
FY2017
FY2018
FY2019
Appointed a female
director
Board of Directors
Began evaluating
the effectiveness
of the Board
of Directors
Increased the
number of outside
directors from
three to four
Reduced the
number of directors
from 17 to 12
Appointed a
non-Japanese
director
Raised the
minimum ratio of
outside directors
to one third
Nomination and
Compensation
Advisory Committee
(Number of outside members/
Total number of members)
Established
1/3
2/4
3/5
Initiatives and
other mechanisms
Introduced
stock-type
compensation SOs*
* Stock options
Established the
Outside Directors
and Outside
A&SB Members
Committee
Outside directors
as well as outside
A&SB members
began visiting
business sites
Discontinued
the ESV Plan*
Reviewed
the corporate
advisor system
Reviewed the
conferring of
representation
rights
Clarified the roles
of directors and
executive officers
* The Policy toward Large-Scale Purchases of Panasonic Shares
Panasonic Annual Report 2018 50
Outside Directors’ Roundtable Discussion
Vitalizing Board of Directors
by Strengthening Governance
The Company’s four outside directors discuss their impressions of Panasonic’s management, changes and issues
related to the Board of Directors, and the training and development of personnel for upper management positions.
Outside Directors’ View of Panasonic
Panasonic is celebrating its 100th anniversary and
has transformed itself constantly up through the
present. Please give us your honest impressions of
Panasonic, which is starting out now on its next
100 years.
Oku
I’d first like to offer my congratulations on
Panasonic’s 100th anniversary. Looking back on the past
10 to 15 years, the environment surrounding Panasonic’s
business has changed substantially. The progress of
digitalization greatly shook the industry as a whole, and
Japanese consumer electronics companies sustained
pressure from Asia, especially Korea. Because it was
difficult to predict such changes, the Company was
forced to take measures in response to them. In the
midst of this, Panasonic began to strengthen its B2B
business and carry out broad overseas development in
Asia and Central and South America.
Since Mr. Tsuga became president in 2012, the
thinking has been to firmly rebuild B2C, the foundation
of Panasonic’s business, and use the cash generated to
expand the B2B domain. Based on this thinking,
Panasonic has clearly started to shift from B2C, where it
Masayuki Oku
Honorary Advisor,
Sumitomo Mitsui Financial Group, Inc.
Involved in numerous international M&A projects;
expertise in international finance and law.
51
Panasonic Annual Report 2018
Yoshinobu Tsutsui
Chairman of the Board,
Nippon Life Insurance Company
Extensive experience at the highest level of
management along with expertise in domestic and
international financial developments.
Introduction
Growth Strategy
Foundation for Growth
Results for Fiscal Year
Ended March 2018
is easy to become embroiled in price competition, to
B2B, where stable earnings can be expected over the
long term, while also conducting reforms to its
organizational structures. I think this business model
reform and this basic strategy are correct. Even in the
B2B domain, Chinese companies are emerging and
competition is also expected to intensify, so going
forward Panasonic should continue to conduct
management with flexibility and a sense of speed.
Ota
A company that has existed for 100 years
certainly has a great deal of strength and determination,
and Panasonic is starting to firmly show this side as
well. While shifting to B2B, including the automotive
business, it is leveraging strengths in consumer
electronics and also creating a new axis in the business,
and at the same time it is firmly developing the solutions
business as a new field. I strongly sense that under Mr.
Tsuga, the four Divisional Company presidents are in
the process of forming their respective strengths while
heading in the same direction.
“Change,” even in government policy, is truly
difficult; it’s not an ordinary occurrence. But Panasonic
today has the power to change. In an industry where
conditions change extremely quickly, the right way to
respond is also constantly changing. This is why I think
a company must constantly keep the power to change
within itself. So-called “big company disease” is when
most of the strong energy is inwardly directed, and
Panasonic still has this nature in certain areas, but the
power to change is there; that is to say, energy is
currently moving in an outward direction. It is important
that going forward Panasonic continues to further grow
its power to change and take on new challenges with
even greater flexibility.
Just as Mr. Oku says, amidst the
Toyama
discontinuous changes wrought by digitalization and
globalization, Japan’s manufacturing industry has lost
the “winning pattern” it had cultivated for so many years
and has struggled mightily to recover from this. The
organizational strength of Japanese companies came
from continuity, or joint work from a harmony rooted in
homogeneity, but in response to discontinuous change,
this strength can often function in the wrong direction.
At such times, a type of regeneration is needed in
which things like discontinuity and diversity are built in
to the organization.
My impression of Panasonic when I came in as an
outside director two years ago, is that regeneration is
progressing more than I had anticipated. Having said
this though, if you asked me if the current
rejuvenation-like level is adequate, I would have to say it
is not adequate. Digitalization and globalization are still
not likely to end, so it will be necessary to continue
regenerating at the organizational level. In response to
these revitalization efforts, I plan to continue to
encourage the Company as a coaching partner.
Hiroko Ota
Professor, National Graduate Institute for
Policy Studies
Involved in national economic policy as the former
Minister of State for Economic and Fiscal Policy;
specializes in public economics and economic policy.
Kazuhiko Toyama
Representative Director (CEO),
Industrial Growth Platform, Inc.
Involved in numerous corporate revitalization projects as
the former COO of Industrial Revitalization Corporation of
Japan; a leading figure in corporate governance in Japan.
Panasonic Annual Report 2018 52
Outside Directors’ Roundtable Discussion
Tsutsui
Panasonic develops a broad range of
businesses on a global scale and naturally faces various
risks. This is why strengthening business management
and governance systems for the sustained growth
required of Panasonic by investors is an extremely
challenging endeavor with a high level of difficulty.
Panasonic I feel is currently boldly engaged in this.
Panasonic, now celebrating its 100th anniversary,
should respect its traditions, in which management has
been rooted in the spirit of founder Konosuke
Matsushita. A vision for the future absolutely cannot be
devised unless it is based on what has been done up
until now. At the same time, tradition is like a
double-edged sword; it provides a foundation for a
vision but can also impede the progress of
change—having both is difficult. In taking up future
challenges, I think it is important to effect transformation
with all employees on the same vector while remaining
rooted in tradition.
Effectiveness of the Board of Directors
The effectiveness of the Board of Directors is an
important element in continuing to transform.
Please give us your thoughts on changes and issues
related to the Board of Directors of Panasonic,
which has worked to strengthen governance.
Oku
Panasonic’s Board of Directors 10 years ago
proceeded according to schedule; that is, it was a
typical board at a traditional company. This has evolved
autonomously over the past five or six years. There is
more open discussion; things have improved a great
deal. Now, looking from the perspective of an outside
director entrusted by shareholders for management, I
confirm strategies devised by the executive side and
ask various questions about risks, and we now engage
in lively discussion.
I have been here for two years, and just in
Toyama
that time I think the discussions and comments have
become lively. Discussions by the Board of Directors
are important in terms of assessing future management
personnel as well, and going forward, I think that
internal directors and Divisional Company presidents
should also be more forthcoming to further enliven
board discussions.
Ota
Panasonic is an interesting company. While it
maintains its old nature, when it decides to change, it
seriously, directly and sincerely works to change. I think
this is a very good quality. The Nomination and
Compensation Advisory Committee, since its
establishment in November 2015, has conducted truly
candid, unreserved discussions. In fiscal 2018, it
discussed revising the corporate advisor system and
reported to the Board of Directors. Based on the spirit
of founder Konosuke Matsushita, Panasonic’s approach
to governance has always been strong, but what is
required now is transparency that is apparent even
when looking from an external viewpoint. This has
progressed rapidly over the past two or three years.
Oku
My impression is that changes in response to
opinions given at the Board of Directors meeting are
made more quickly. For example, in last year’s
questionnaire on evaluation of the Board of Directors’
effectiveness, I proposed hearing the CEO’s thoughts
on such topics as medium-to-long term issues and
management strategy, and my proposal was
incorporated right away at the next Board of Directors
meeting. It continues to be implemented today,
providing a valuable opportunity to learn the thoughts of
top management.
Discussions by the Board
of Directors have clearly
been enlivened
53
Introduction
Growth Strategy
Foundation for Growth
Results for Fiscal Year
Ended March 2018
Ota
I also said in the past that board discussions
are mostly about individual issues and that there is very
little about management strategy, so it is uninteresting,
but time was immediately created after that for free
debate on a variety of themes apart from agenda items
up for resolution. Panasonic conducts a very wide range
of businesses through its four Divisional Companies, so
for mid-term planning and long-term strategy, I think it
is important to utilize this time to engage in debate
repeatedly on various themes.
Toyama
could have constructive and serious debate while
exchanging opinions for an adequate amount of time on
strategic themes like the business portfolio and the
balance between investment and financial discipline.
Yes, I agree. It would be good if all members
directors is important. It is often said that supervision
should be separate from execution. This is important as
a mechanism of governance, but at the same time, it’s
important also for supervision and execution to
substantively deliberate and make decisions as a single
team with a sense of unity and trust. I think the
effectiveness of the Board of Directors is improved
when issues and solutions are presented to the board at
an early stage to allow us to confirm them and then
make decisions upon active deliberation. I think it is
necessary to continue sustained efforts going forward
toward an ideal Board of Directors meeting.
Tsutsui
I think the same. In particular, outside
directors don’t know the situation with the executive
side very well, so it is possible that the right decisions
just can’t be made through formal deliberations. For this
reason, satisfactory deliberations are important, which
means whether or not decisions are being made that
can be truly understood and supported by outside
Substantive deliberations
will be increasingly
important going forward
Personnel Development for the Next Generation of
Upper Management
Please tell us your opinions on the qualities that
will be required of upper management at
Panasonic going forward and how to develop
qualified personnel.
Ota
Compared to the time around 2013 when I was
appointed an outside director, my impression is that
systems for upper management development, selection
and succession have been established fairly well.
Actually, the Nomination and Compensation
Advisory Committee is currently discussing various
matters, with an awareness of transparency, related to
the qualities required of the CEO’s successor and the
preferred timing of succession. Regarding the required
qualities, the speed of change in the industry is very
fast, so there is no fixed answer, and I think this will be
determined when the time comes. However, the ability
to think from a Group-wide perspective, sensitivity to
business models, and the ability to choose strategies
flexibly are always important.
Tsutsui
I also think that how to develop personnel
with a broad viewpoint capable of managing business
as a whole is truly a very big challenge. The business
area is this large and it is global, so the Divisional
Company system and Business Division system make
sense, but with this organizational format there is the
Panasonic Annual Report 2018 54
Outside Directors’ Roundtable Discussion
risk of it being difficult to develop personnel with a
broad viewpoint. Of course having a vision in each
specialist domain is also important, but on this basis, I
think it is necessary to develop personnel with a certain
amount of knowledge of other Divisional Companies
and Business Divisions and with a Group-wide vision.
To this end, it is also necessary to conduct cross-divisional
personnel exchange and deliberate rotations from an
early stage. Another potential method is giving younger
employees in their late 20’s or in their 30’s short-term
experiences outside their own divisions.
Toyama
the geographical axis of business development into
diverse regions, the axis of diverse businesses, and
the function axis of planning, development,
production, sales and financial affairs. However, it is
not possible to be a specialist in all of the three axes,
so realistically, assigning suitable personnel to each
position and forming an optimal combination is
inevitable. For this reason, the ability to select optimal
The CEO must always think on three axes:
Message to Investors
Finally, please give us your message to
Panasonic’s shareholders and investors.
Toyama
The Companies Act in Japan stipulates the
55
Panasonic Annual Report 2018
personnel and to entrust work to people are also
important. Truly, the founder’s approach of
“Entrusting work to your subordinates but not
completely” is important today. To accomplish this, it
is important to simultaneously think also of developing
successors to the positions at the CEO’s right hand,
the CFO, CSO, CTO, etc.
Oku
For upper management, how to develop
people with high latent ability capable of thinking
while joining information and technology is important.
Having a global mindset is also to be emphasized.
The issue is how we develop, from a long-term
standpoint, personnel with management experience
capable of combining various elements from a global
perspective. It is not enough to simply have them
think intellectually about it; people must be developed
by actually giving them various experiences. Another
issue is how to develop non-Japanese nationals for
positions in upper management.
Of course diversity is important, and it will be
Toyama
necessary to expand the pool and have not only Japanese
but people globally handling management in the future.
From the standpoint of diversity, I would like
Ota
there to be a few more women in upper management.
Another big change is that Panasonic now is fairly
active about promoting from outside the company. Mr.
Higuchi is a former Panasonic employee, so he’s perhaps
not completely from the outside, but I think inviting in
executive-class people from the outside was unthinkable
at Panasonic previously. This is a very good change.
Personnel development
and promotion systems
are being established
enhancement of corporate governance practices. I
define the basic principle of corporate governance as
“capital democracy”. This means that shareholders are
the final beneficiaries and also play an important role in
governance. Panasonic’s long-term corporate value
includes not only economic value but various social
values, and the process of effecting the sustained
growth of this total corporate value is the joint work of
Introduction
Growth Strategy
Foundation for Growth
Results for Fiscal Year
Ended March 2018
We will enhance
corporate value together
with shareholders
shareholders committed to the Company and we in
management. The Board of Directors, which centers on
outside directors, is clearly oriented to this, and we plan
to continue moving forward together with shareholders.
The position of outside director is the same
Ota
as investors who watch over the company from a
medium-to-long term perspective. Speaking from this
perspective, I think it is most important to not be at
all reassured by recent growth in sales and profits
and to continue to grow by constantly taking on
various challenges.
Panasonic today is starting to have internally the
power to change itself in order to take on this challenge.
It also thoroughly and straightforwardly reports its
situation to shareholders and investors, including issues
and problems. In this sense, it is a very open company.
To continue to change going forward, this openness,
being open to the outside, is extremely important, and I
personally rate Panasonic highly in this respect.
Tsutsui
As for my message to shareholders and
investors, I think the daily stock price and quarterly
results are important, but I would say please look at
Panasonic from a longer time axis.
I would like shareholders and investors to look at
Panasonic from the standpoint of how the Company is
currently doing on its mid-term plan targets, or based
on its stated vision, how the Company is developing a
governance system to support future growth, how the
Company has overcome difficulties while being exposed
to various risks in the past, and whether it will continue
to overcome them.
Oku
Please recognize the appeal of Panasonic as
a company that’s been here 100 years and has
continued to transform for 100 years.
I agree that achieving growth in sales and profit is
just a transition point. But I must say that I was deeply
moved when the Company achieved both sales and
profit growth in real terms, excluding the effects of
foreign currency exchange rates, for the first time in
seven years.
How will Panasonic look in 10 years? There are
businesses that will generate results and move forward
while respecting its traditions and businesses that have
thrown out the past and are growing greatly in a very
different world, so actually, I’m not able to predict it
myself. One thing for certain though is that over these
past 100 years, though times have not always been
good, Panasonic has a track record of overcoming even
the hard times and continuing to transform. And, this
company will no doubt continue to transform into the
future. I think this is something we can certainly expect.
Panasonic Annual Report 2018 56
Directors, Audit & Supervisory Board Members and Executive Officers
(As of June 28, 2018) (Based on information contained in the Company’s Annual Securities Report)
Directors
Laurence W. Bates
Director
Yasuyuki Higuchi
Representative Director
Kazuhiro Tsuga
Representative Director, President
Hirokazu Umeda
Director
Mototsugu Sato
Representative Director
Shusaku Nagae
Director, Chairman of the Board
57
Panasonic Annual Report 2018
Introduction
Growth Strategy
Foundation for Growth
Results for Fiscal Year
Ended March 2018
Masayuki Matsushita
Director, Vice Chairman of the Board
Masayuki Oku
Outside Director
Hiroko Ota
Outside Director
Yoshio Ito
Representative Director
Yoshinobu Tsutsui
Outside Director
Kazuhiko Toyama
Outside Director
Panasonic Annual Report 2018 58
Directors, Audit & Supervisory Board Members and Executive Officers
(As of June 28, 2018) (Based on information contained in the Company’s Annual Securities Report)
Outside Directors
Masayuki Oku
(Independent director)
June 2005
June 2008
June 2017
President, Sumitomo Mitsui Banking
Corporation / Chairman, Board of
Directors of Sumitomo Mitsui
Financial Group, Inc.
Director of the Company (current
position)
Honorary Advisor, Sumitomo Mitsui
Financial Group, Inc. (current position)
Yoshinobu Tsutsui
(Independent director)
Apr. 2011
June 2015
Apr. 2018
President, Nippon Life Insurance
Company
Director of the Company (current
position)
Chairman, Nippon Life Insurance
Company (current position)
Hiroko Ota
(Independent director)
Sep. 2006
Aug. 2008
June 2013
Minister of State for Economic and
Fiscal Policy
Professor, National Graduate
Institute for Policy Studies (current
position)
Director of the Company (current
position)
Kazuhiko Toyama
(Independent director)
Apr. 2003
Apr. 2007
June 2016
Senior Representative Director
(COO), Industrial Revitalization
Corporation of Japan
Representative Director (CEO),
Industrial Growth Platform, Inc.
(current position)
Director of the Company (current
position)
Director, Chairman of the Board
Representative Directors
Shusaku Nagae
Apr. 1972
Dec. 2004
June 2007
June 2010
Apr. 2011
Jan. 2012
June 2012
June 2013
Joined Matsushita Electric Works, Ltd. (MEW)
Managing Executive Officer, MEW
Managing Director, MEW
President, Panasonic Electric Works Co., Ltd.
(former MEW)
Senior Managing Executive Officer of the
Company / In charge of Lighting Company
and Panasonic Ecology Systems Co., Ltd.
In charge of Solution Business / President,
Eco Solutions Company
Executive Vice President of the Company /
In charge of Corporate Division for
Promoting Energy Solution Business
Chairman of the Board of Directors
(current position)
Director, Vice Chairman of the Board
Masayuki Matsushita
Apr. 1968
Oct. 1981
Feb. 1986
June 1990
June 1992
July 1995
June 1996
June 2000
Joined the Company
Director, Washing Machine Division
Director of the Company
Managing Director of the Company
Senior Managing Director of the Company
In charge of Overseas Operations
Executive Vice President of the Company
Vice Chairman of the Board of Directors
(current position)
Representative Director, President
Kazuhiro Tsuga
President / CEO
Apr. 1979
June 2001
June 2004
Apr. 2008
Apr. 2011
June 2011
June 2012
June 2017
Joined the Company
Director, Multimedia Development Center
Executive Officer of the Company / In charge
of Digital Network & Software Technology
Managing Executive Officer of the Company /
President, Panasonic Automotive Systems
Company
Senior Managing Executive Officer of the
Company / President, AVC Networks
Company
Senior Managing Director of the Company
President of the Company
Representative Director, President of the
Company (current position) / President of
the Company (current position) / Chief
Executive Officer (CEO) (current position)
Representative Director
Yoshio Ito
Executive Vice President /
CEO, Automotive & Industrial Systems Company
Apr. 1973
Apr. 2006
Apr. 2009
Jan. 2013
Apr. 2013
Apr. 2014
June 2014
Apr. 2017
June 2017
Joined the Company
Vice President, Panasonic AVC Networks
Company / Director, System Business Group
Executive Officer of the Company /
President, Lighting Company
President, Industrial Devices Company /
President, Energy Company
Managing Executive Officer of the Company
Senior Managing Executive Officer of the
Company / President (now CEO),
Automotive & Industrial Systems Company
(current position)
Senior Managing Director of the Company
Executive Vice President of the Company
Representative Director of the Company
(current position) / Executive Vice President
of the Company (current position)
Mototsugu Sato
Senior Managing Executive Officer / CSO / CHRO
Apr. 1979
Apr. 2008
Apr. 2011
Oct. 2013
June 2014
Apr. 2015
Apr. 2016
Mar. 2017
June 2017
Joined Matsushita Electric Works, Ltd. (MEW)
Executive Officer, MEW
Senior Executive Officer, Panasonic
Electric Works Co., Ltd. (former MEW)
Executive Officer of the Company / In
charge of Planning
Director of the Company
Managing Director of the Company
Senior Managing Director of the Company /
In charge of Human Resources
CEO, Panasonic Holding (Netherlands) B.V.
(current position)
Representative Director of the Company
(current position) / Senior Managing
Executive Officer of the Company (current
position) / Chief Strategy Officer (CSO)
(current position) / Chief Human Resources
Officer (CHRO) (current position)
Yasuyuki Higuchi
Senior Managing Executive Officer /
CEO, Connected Solutions Company
May 2003
May 2005
Mar. 2007
Apr. 2008
July 2015
Apr. 2017
June 2017
President and Representative Director,
Hewlett-Packard Japan, Ltd.
President and Representative Director,
The Daiei, Inc.
Representative Executive Officer and
COO, Microsoft Kabushiki Kaisha (now
Microsoft Japan Co., Ltd.)
Representative Executive Officer and
President, Microsoft Kabushiki Kaisha
(now Microsoft Japan Co., Ltd.)
Representative Executive Officer and
Chairman, Microsoft Japan Co., Ltd.
Senior Managing Executive Officer of the
Company / President (now CEO), Connected
Solutions Company (current position)
Representative Director of the Company
(current position) / Senior Managing
Executive Officer of the Company (current
position)
Directors
Hirokazu Umeda
Managing Executive Officer / CFO
Apr. 1984
Oct. 2012
Apr. 2017
June 2017
Apr. 2018
Joined the Company
General Manager, Corporate Management
Support Group, Corporate Strategy Division
Executive Officer of the Company / In
charge of Accounting and Finance
Director of the Company (current position) /
Executive Officer of the Company /
Chief Financial Officer (CFO) (current
position)
Managing Executive Officer of the Company
(current position)
President, Panasonic Equity Management
Japan Co., Ltd. (current position)
Laurence W. Bates
Executive Officer / GC / CRO / CCO
Mar. 1987
Sep. 1998
Apr. 2014
Apr. 2018
June 2018
Admitted to New York State Bar (current
position)
General Counsel-Japan, General Electric
Company, Tokyo
Senior Managing Director and Chief Legal
Officer, LIXIL Group Corporation, Tokyo
Executive Officer of the Company (current
position) / General Counsel (GC) (current
position) / Chief Risk Management Officer
(CRO) (current position) / Chief Compliance
Officer (CCO) (current position)
Director of the Company (current position)
59
Panasonic Annual Report 2018
Introduction
Growth Strategy
Foundation for Growth
Results for Fiscal Year
Ended March 2018
Audit & Supervisory Board Members
Hirofumi
Yasuhara
Yoshio
Sato
Mitsuko
Miyagawa
Toshio
Kinoshita
Mamoru
Yoshida
Senior Audit & Supervisory
Board Members
Hirofumi Yasuhara
Apr. 1979
June 2008
June 2012
June 2014
June 2015
Joined the Company
Director, PanaHome Corporation
Representative Director, PanaHome
Corporation
Senior Audit & Supervisory Officer
(non-statutory, full-time),
Automotive & Industrial Systems Company
of Panasonic Corporation
Senior Audit & Supervisory Board Member
of the Company (current position)
Mamoru Yoshida
Apr. 1979
Apr. 2008
Apr. 2009
Apr. 2012
June 2012
Apr. 2013
Apr. 2015
June 2015
June 2016
Joined the Company
Vice President, Panasonic AVC Networks
Company / Director, Network Business Group
Executive Officer of the Company / Senior
Vice President, AVC Networks Company
Managing Executive Officer of the Company /
President, AVC Networks Company
Managing Director of the Company
In charge of Technology, Intellectual
Property and Information Systems
Senior Vice President, Appliances Company
Managing Executive Officer of the Company
Senior Audit & Supervisory Board Member
of the Company (current position)
Outside Audit & Supervisory Board Members
Yoshio Sato
(Independent Audit & Supervisory Board member)
Mitsuko Miyagawa
(Independent Audit & Supervisory Board member)
Apr. 1986
Apr. 1995
June 2016
Registered as Attorney at Law (Japan)
(current position)
Partner, TMI Associates (current position)
Audit & Supervisory Board Member of the
Company (current position)
July 2007
July 2011
Apr. 2014
June 2014
July 2015
President and Director, Chief Executive
Officer (Representative Director) of
Sumitomo Life Insurance Company
President and Representative Director,
Chief Executive Officer of Sumitomo Life
Insurance Company
Chairman and Representative Director of
Sumitomo Life Insurance Company
Audit & Supervisory Board Member of the
Company (current position)
Chairman of the Board of Sumitomo Life
Insurance Company (current position)
Toshio Kinoshita
(Independent Audit & Supervisory Board member)
July 1983
June 1994
July 1998
July 2007
July 2013
June 2014
Registered as Certified Public Accountant
(Japan) (current position)
Senior Partner of Chuo Audit Corporation
Managing Partner for Japanese Business
Network of PricewaterhouseCoopers LLP
National Office
Chief Executive of The Japanese Institute
of Certified Public Accountants
Council Member of The Japanese Institute
of Certified Public Accountants
Audit & Supervisory Board Member of the
Company (current position)
Panasonic Annual Report 2018 60
Directors, Audit & Supervisory Board Members and Executive Officers
(As of June 28, 2018) (Based on information contained in the Company’s Annual Securities Report)
Executive Officers
President
Kazuhiro Tsuga
Chief Executive Officer (CEO)
Executive Vice President
Yoshio Ito
CEO, Automotive & Industrial Systems Company
Senior Managing Executive Officers
Yoshiyuki Miyabe
Chief Technology Officer (CTO)
Chief Manufacturing Officer (CMO)
Chief Quality Officer (CQO)
Chief Procurement Officer (CPO)
Chief Information Officer (CIO)
Mototsugu Sato
Chief Strategy Officer (CSO)
Chief Human Resources Officer (CHRO)
In charge of Business Development, General Affairs, Social Relations,
and Business Creation Project
CEO, Panasonic Holding (Netherlands) B.V.
Tetsuro Homma
CEO, Appliances Company
In charge of Consumer Business and FF Customer Support & Management
Masahisa Shibata
Senior Vice President, Automotive & Industrial Systems Company
In charge of Automotive Business
Makoto Kitano
CEO, Eco Solutions Company
In charge of Construction Safety Regulations Administration Department
Yasuyuki Higuchi
CEO, Connected Solutions Company
Managing Executive Officers
Takashi Toyama
Representative in Tokyo
In charge of Government and External Relations
Director, Government and External Relations Division
In charge of Tokyo Olympic & Paralympic Business Promotion
Laurent Abadie
COO, Panasonic Holding (Netherlands) B.V.
Regional Head for Europe & CIS
Chairman & CEO, Panasonic Europe Ltd.
Managing Director, Panasonic Marketing Europe GmbH
Yukio Nakashima
In charge of Customer Satisfaction
Senior Vice President, Appliances Company
In charge of Consumer Marketing
Director, Consumer Marketing Sector for Japan Region
Daizo Ito
Regional Head for India, South Asia, Middle East and Africa
Chairman, Panasonic India Pvt. Ltd.
Senior Vice President, Eco Solutions Company
In charge of Global Marketing
Toshiyuki Takagi
Senior Vice President, Appliances Company
President, Air-Conditioner Company
Shinji Sakamoto
Senior Vice President, Automotive & Industrial Systems Company
In charge of Industrial Business
Tatsuo Katakura
Senior Vice President, Connected Solutions Company
In charge of Global Solution Business
President, Panasonic System Solutions Japan Co., Ltd.
Kenji Tamura
Senior Vice President, Automotive & Industrial Systems Company
In charge of Energy Business
Hirokazu Umeda
Chief Financial Officer (CFO)
In charge of Groupwide Cost Busters Project and BPR Project
President, Panasonic Equity Management Japan Co., Ltd.
Adoption of CXO titles
The Company has adopted
“CXO” titles indicating the
chief officers of each
function in order to provide
a clearer understanding of
the positions to global
stakeholders. Each “CXO”
has the function as shown
at right.
Target Functions
Management
Technology
Manufacturing Innovation
Quality
Procurement
Information Systems
Risk Management
Compliance
Titles
CEO (Chief Executive Officer)
CTO (Chief Technology Officer)
CMO (Chief Manufacturing Officer)
CQO (Chief Quality Officer)
CPO (Chief Procurement Officer)
CIO (Chief Information Officer)
CRO (Chief Risk Management Officer)
CCO (Chief Compliance Officer)
Corporate Communications, Advertising, and Citizenship
CBCO (Chief Brand Communications Officer)
Planning
Accounting and Finance
Human Resources
CSO (Chief Strategy Officer)
CFO (Chief Financial Officer)
CHRO (Chief Human Resources Officer)
61
Panasonic Annual Report 2018
Introduction
Growth Strategy
Foundation for Growth
Results for Fiscal Year
Ended March 2018
Executive Officers
Masahiro Ido
In charge of Solution Sales
Director, Business Solutions Division
In charge of MICE Business Promotion
Director, MICE Business Promotion Division
Director, Tokyo Olympic & Paralympic Enterprise Division
Satoshi Takeyasu
Chief Brand Communications Officer (CBCO)
Director, Groupwide Brand Communications Division
In charge of Facility Management and Corporate Sports Promotion
Junichiro Kitagawa
Vice President, Appliances Company
In charge of Overseas Marketing Director, Consumer Marketing Division
Yuki Kusumi
Vice President, Automotive & Industrial Systems Company
Director, Automotive Energy Business Division, SANYO Electric Co., Ltd.
Yoshiyuki Iwai
Vice President, Eco Solutions Company
In charge of Legal Affairs, Intellectual Property, and Intelligence & Liaison
Makoto Ishii
In charge of Information Systems and Logistics
Vice President, Appliances Company
In charge of Information Systems and Logistics
Hiroyuki Aota
Vice President, Connected Solutions Company
Director, Process Automation Business Division
President, Panasonic Smart Factory Solutions Co., Ltd.
Masashi Yamada
Vice President, Eco Solutions Company
Director, Housing Systems Business Division
Michiko Ogawa
In charge of Technics Brand
Vice President, Appliances Company
In charge of Technology
Director, Corporate Engineering Division
General Manager, Technics Business Promotion
Hirotoshi Uehara
Vice President, Automotive & Industrial Systems Company
Director, Automotive Infotainment Systems Business Division
Eiichi Katayama
In charge of Strategic Business
Vice President, Eco Solutions Company
In charge of AGE-FREE Business
President, Panasonic Cycle Technology Co., Ltd.
Mitsuki Wada
In charge of Procurement
President, Global Procurement Company
Thomas Gebhardt
Regional Head for North America
Chairman & CEO, Panasonic Corporation of North America
Akira Kono
Vice President, Appliances Company
Director, Consumer Marketing Division (Japan),
Consumer Marketing Sector for Japan Region
Masashi Nagayasu
Vice President, Automotive & Industrial Systems Company
Director, Automotive Marketing & Sales Division
Ryuji Matsushita
Vice President, Eco Solutions Company
In charge of Construction Business
President, Panasonic Homes Co., Ltd.
Manish Sharma
President, Panasonic India Pvt. Ltd.
Vice President, Appliances Company
Eiji Fujii
Vice President, Automotive & Industrial Systems Company
In charge of Technology
Director, Engineering Division
Hiroyuki Tagishi
Vice President, Appliances Company
Managing Director, Panasonic Appliances Asia Pacific
Kiyoshi Otaki
Vice President, Appliances Company
In charge of Home Appliances Business
Sadaaki Yokoo
Regional Head for China & Northeast Asia
Chairman, Panasonic Corporation of China
Masahiro Shinada
Vice President, Eco Solutions Company
Director, Energy Systems Business Division
Director, Solar Systems Business Unit
Laurence W. Bates
General Counsel (GC)
Chief Risk Management Officer (CRO)
Chief Compliance Officer (CCO)
Director, Risk & Governance Management Division
Hideshi Fuchiue
Vice President, Appliances Company
In charge of AVC Business
Masaharu Michiura
Vice President, Eco Solutions Company
In charge of Marketing for Japan Region
Director, Marketing Division
Toshinori Kishi
Vice President, Connected Solutions Company
Director, Media Entertainment Business Division
Shigeo Okuda
Vice President, Automotive & Industrial Systems Company
In charge of Automotive Technology
Director, Automotive Electronics Systems Business Division
Tatsuo Ogawa
In charge of Manufacturing Innovation
Director, Manufacturing Technology and Engineering Division
In charge of Quality Administration and Environmental Affairs
Panasonic Annual Report 2018 62
Panasonic recognizes that corporate governance is an important basic structure for enhancing corporate value
and continues to work to enhance its effectiveness.
In fiscal 2018, ended March 31, 2018, discussions were held based on the results of a questionnaire on
“Evaluation of the Board of Directors Effectiveness.” Measures to strengthen governance were conducted,
including expanding the discussion of business strategies by the Board of Directors. Panasonic will continue
strengthening corporate governance going forward.
Corporate Governance Structure and Initiatives
Basic Policy
Outline of Structure (As of June 28, 2018)
The Company, since its establishment, has operated its
business under its management philosophy, “contributing
to the progress and development of society and the
well-being of people worldwide through its business
activities.”
Also, the Company believes it is important to
enhance corporate value by fulfilling accountability
through dialogue with various stakeholders such as
shareholders and customers, making effort to execute
transparent business activities, and swiftly conducting
business activities with fairness and honesty based on
its basic philosophy of “a company is a public entity of
society.”
The Company recognizes that corporate governance is
the important basic structure for the aforementioned
purpose and is working to enhance its effectiveness.
The Board of Directors
• The Board of Directors is composed of 12 directors
including four outside directors, of whom one is a woman
(outside director).
• In fiscal 2019, we appointed one director who is a
non-Japanese national.
• The chairperson of the Board is the chairman (inside
director).
• The Company elects outside directors from among
managers of external entities, who have extensive
managerial experience in various careers and deep
insight, and are expected to provide valuable opinions as
supervisors of decision-making related to business
execution and the execution of directors’ duties.
• All directors are reelected at the annual general meeting
of shareholders.
Corporate Governance Structure
g
n
i
t
e
e
M
s
r
e
d
o
h
e
r
a
h
S
l
Election
Board of Directors
Supervisory Functions
Corporate Strategy
Decision-making Functions
Empowerment & Supervision
Executive Functions
Group Strategy Meeting*2
Audit
Nomination and Compensation
Advisory Committee*1
President
*3
Election
Audit & Supervisory Board
Auditing Functions
Audit
Collaboration
Election
Accounting Auditor
Accounting Audit
Divisional Companies
Business Divisions
Regional Management
Corporate Strategy Head Office
Professional Business
Support Sector
Innovation Promotion Sector
63
Panasonic Annual Report 2018
*1 Deliberates on advisory matters and reports to the Board of Directors
*2 Complements Board of Directors’ decision-making
*3 Including affiliated companies (Japan and overseas), etc.
Growth Strategy
Foundation for Growth
Results for Fiscal Year
Ended March 2018
Main items discussed by the Board of Directors in
fiscal 2018
In addition to discussions on business policy, the Board of
Directors deliberated on and decided matters related to
medium-to-long term strategy, including M&A and
large-scale capital investment projects, and important
aspects of business execution, such as dividend policy
and executive HR issues. In addition, it received business
reports from Divisional Company presidents and region
representatives, conducted oversight of the execution of
duties, and verified the internal control system and risk
management system. The Board of Directors also
discussed compliance and financial strategies. In addition,
the significance of possessing strategic shareholdings
was examined by the Board of Directors.
Audit & Supervisory Board members (A&SB members)
and Audit & Supervisory Board (A&SB)
• The A&SB is composed of five A&SB members including
three outside A&SB members, of whom one is a woman
(outside A&SB member).
• The Company sets A&SB members who are able to exert
their monitoring functions according to their individual
discretionary decision, but not to majority vote decision.
The A&SB members are also able to independently act
upon their own decision in pursuing liabilities of directors.
• The Company sets full-time senior A&SB members who
are well versed about corporate operations and are able
to comprehend actual condition of businesses by
exercising their right to visit and investigate operating
sites. The senior A&SB members are elected from among
those who have experiences as higher or equal position
of directors or equivalent position.
• The Company elects outside A&SB members from among
managers, lawyers, and certified public accountants, who
have extensive expertise with various careers and deep
insight and can be expected to conduct valuable audits
of the execution of business by directors.
Optional Nomination and Compensation Advisory
Committee
• Chaired by an independent outside director
• Majority of members are independent outside directors.
• Deliberates on the results of internal reviews of the
nomination of candidates for director, executive officer,
and audit & supervisory board member and on the
appropriateness, etc. of the Company’s director and
executive officer compensation system, and reports on
these matters to the Board of Directors
• In fiscal 2018, discussions were conducted on the
procedure for the appointment of the CEO’s successor
and on a review of the corporate advisor system, and
these matters reported to the Board of Directors.
Group strategy meeting
• Meetings are held twice monthly in principle to discuss
and set the direction of the Group’s medium-to-long term
strategy and priority issues.
• Around 10 members of upper management participate,
including the president, four Divisional Company
presidents, and non-Japanese executive officers.
• Managers of related business and functional divisions in
positions of responsibility also participate in discussions
depending on the matter considered.
Utilization of Outside Directors
Policy for nominating independent outside director
candidates and their qualifications
The Company nominates independent outside director
candidates from the standpoint that there be no conflict of
interest between the Company and the outside directors, and
the Company can increase and enhance the effectiveness of
the monitoring of the Board based on an objective and neutral
point of view.
Candidates for independent outside director who satisfy
the following independence standards are elected from
among those who have extensive knowledge and expertise,
such as managers or experts of external entities.
The Board of Directors resolved that the minimum ratio
of outside directors should be one third on and after June
29, 2017. Based on this, we nominate candidates for
outside director and appoint them at the ordinary general
meeting of shareholders, thereby enhancing the objectivity
and neutrality of the Board of Directors and strengthening
the supervisory function.
Independence standards for independent directors /
Audit & Supervisory Board members (A&SB members)
The Company established independence standards for
independent directors/A&SB members based on
independence standards required by financial instruments
exchanges such as the Tokyo Stock Exchange. For example,
the following persons are not considered independent.
• Major business partner of the Company or said
executing person (including those who had fallen
under this category in the past)
• Consultant, accountant or attorney (who currently is or
was in the past, in the case of a legal entity) who
receives a significant amount of money from the
Company
• The aforementioned close relative (a second-degree or
closer relative) or a close relative of an executing
person of the Company or subsidiary
Also, “past” shall mean “within the last three years” and
“major business partner” shall mean the annual amount of
transaction exceeds 2% of either of their annual
consolidated sales. “Significant,” in the case of individuals,
shall be judged as 12 million yen. For a detailed definition
of the Company’s independence standards please refer to
the “Corporate Governance Report.”
Provision of information and assistance to outside
directors
The division in charge provides support to outside directors,
such as prior explanation of agendas of the Board meeting and
provision of information to enable effective discussions by the
Board of Directors.
Panasonic Annual Report 2018 64
Governance
Implementation and Utilization of Evaluation of
the Board of Directors Effectiveness
Once a year, the Board of Directors administers a
questionnaire to all its members in order to further enhance
the Board’s effectiveness.
Based on an analysis of the fiscal 2017 questionnaire
results, it was concluded with respect to the effectiveness of
the Board of Directors that basically the current state of the
Board is appropriate, but a number of opinions and proposals
were presented. Discussions were held on the opinions and
proposals, and improvement measures were implemented.
The Company conducted the effectiveness evaluation
again in fiscal 2018, implementing the questionnaire after
considering ideals for the Board of Directors and opinions
and appraisals related to the recent revisions to the system
of directors, as well as other perspectives expected in the
Corporate Governance Code. The Company is sequentially
implementing improvements in response to the opinions
and proposals that arose.
The Company continues to conduct evaluations of the
effectiveness of its Board of Directors and improve the
evaluation methods.
Response to fiscal 2017 questionnaire results
Fiscal 2017 Questionnaire Results
Response to Questionnaire Results
1. General conclusions
• Composition and operation of the Board assessed as appropriate
• Many opinions on enhancing deliberations, especially
deliberations on medium-to-long term strategy
• Make up time frames to discuss medium-to-long
term strategies at Board of Directors’
meetings separately
(Fiscal 2018 Themes)
2. Items implemented based on questionnaire results
Discuss financial strategies, global compliance, etc.
• Make up time frames to discuss medium-to-long term strategies
at Board of Directors’ meetings separately
• Increase hours of Board of Directors’ meetings
• Increase hours of Board of Directors’
meetings
• Expand the scope of agendas at Nomination and Compensation
• Expand the scope of agendas at Nomination
Advisory Committee meetings
3. Items for future consideration
• Revisions to agenda items considered by the Board
• Revisions to ratio of outside directors on the Board, further
promotion of diversity
and Compensation Advisory Committee
meetings
(Fiscal 2018 Themes)
(1) Procedure for the appointment of CEO’s successor
(2) Review the corporate advisor system
Fiscal 2018 questionnaire and results
Fiscal 2018 Questionnaire items (February 2018)
Questionnaire Results
• Size and composition of the Board of
Directors
• Operation of the Board of Directors
• Discussion of medium-to-long term business
strategies during the current fiscal year
• Supervisory and decision-making functions
of the Board of Directors
• Information provided to directors and A&SB
members
65
Panasonic Annual Report 2018
1. General conclusions
• With regard to the effectiveness of the Board of
Directors, both the supervisory and decision-making
functions of the Board of Directors are basically
evaluated as appropriate
2. Proposals
• To strengthen the functions of the Board of Directors,
discussion on medium-to-long term strategies and
compliance should be expanded
3. Correspondence based on questionnaire
results
• Continue discussion of medium-to-long term
strategies in fiscal 2019, expand themes
• Carry out the Board of Directors’ operational
improvements
The Company will also continue to consider and make
efforts to further strengthen the effectiveness of its
Board of Directors.
Introduction
Growth Strategy
Foundation for Growth
Results for Fiscal Year
Ended March 2018
Compensation
Illustration of Compensation Structure
Performance-based compensation
The Company implemented performance-based
compensation as a short-term incentive to provide
incentive to boost business performance, and it shall be
determined in conjunction with performance evaluation
for Panasonic as a whole and the specific businesses a
director is in charge of, based on performance
indicators, such as net sales, operating profit, free cash
flow, and CCM*.
*Capital Cost Management (CCM) is a management control index developed by the
Company to evaluate return on capital.
Stock-type compensation stock options
The Company implemented stock-type compensation
stock options as a long-term incentive. Said stock
options are to allot stock acquisition rights to directors
(excluding outside directors) of Panasonic and executive
officers and certain other officers who are responsible
for business operations over the Panasonic Group for
the purpose of providing an incentive for allottees to
further contribute to the improvement of long-term
operating results and higher corporate value through
sharing the benefits and risks of share holdings with
Panasonic’s shareholders.
For details about the conditions for the issuance and
exercise of said stock options, please refer to the
“Corporate Governance Report.”
Procedure for determining remuneration
Compensations of directors and executive officers are
decided by directors, who were given the authority by
the Board of Directors, based on the Company’s
director and executive officer compensation system. In
November 2015, the Company has established an
optional Nomination and Compensation Advisory
Committee, chaired by an independent outside director.
In response to inquiries from the Board, this committee
deliberates and reports on the appropriateness of the
Company’s director and executive officer compensation
system.
Long-term incentive
Stock-type compensation
stock options
Short-term incentive
Performance-based
compensation
Basic
compensation
Amount of Compensation for Directors and A&SB Members
for the Fiscal Year Ended March 2018
Classification
Number
of
persons
Amount (million yen)
Basic
compensation
Performance-
based
compensation
Stock-type
compensation
stock options
Directors
(other than
outside
directors)
A&SBMs
(other than
outside
A&SBMs)
Outside
directors
Outside
A&SBMs
15
1,089
672
239
178
2
4
3
75
64
39
75
64
39
—
—
—
—
—
—
Note: Seven directors who retired at the conclusion of the 110th Ordinary General Meeting
of Shareholders held on June 29, 2017 are included in the above.
Directors Who Received Compensation over 100 Million Yen
Name
Classification
Amount (million yen)
Basic
compensation
Performance-
based
compensation
Stock-type
compensation
stock options
Shusaku
Nagae
Kazuhiro
Tsuga
Yoshio
Ito
Mototsugu
Sato
Director
Director
Director
Director
119
238
147
128
100
104
78
69
—
63
44
40
19
71
25
19
Panasonic Annual Report 2018 66
Internal control for financial reporting
The Company has documented the actual status of its
internal control system, with integrated control provided by
the Internal Control Promotion Office, in order to ensure
reliability in the financial reporting of the Panasonic Group
including its subsidiaries, ranging from the control
infrastructure to actual internal control activities.
Specifically, the Company has reinforced its internal
controls by implementing self-checks and self-assessment
programs at each of the Divisional Companies and
Business Divisions, etc. Then, internal auditing managers
of the Divisional Companies appointed by the Company at
each of the Divisional Companies, etc. conduct audits.
Based on the audits, the Internal Control Promotion Office
supervises the Group-wide internal control audits in order
to confirm the effectiveness of each company’s financial
reporting. With the aim of further enhancing the Group’s
internal control system, in fiscal 2018 Panasonic had
approximately 400 personnel assigned to conduct internal
audits in the Internal Auditing Group.
Constructive dialogue with shareholders and
investors
The CFO is responsible for investor relations (IR) activities.
The president, chief strategy officer (CSO), CFO, and each
president of Divisional Companies mainly engage in
dialogue with shareholders and investors. This includes
announcements of financial results and individual meetings.
Also, the IR staff members in the Corporate Finance & IR
Department are in charge of day-to-day communication
with shareholders and investors.
For IR geared toward institutional investors and
securities analysts, the Company conducts presentation
meetings of quarterly financial results announcements,
annual presentation regarding business policy of the
Company and Divisional Companies, and other
activities. Also, for overseas investors, the Company
holds presentation meetings utilizing conferences
hosted by financial institutions.
Views and management issues obtained from
shareholders and investors through IR activities are
appropriately relayed to senior management and the
relevant departments including Divisional Companies in
internal meetings such as the Group Strategy Meeting
and are utilized to improve the quality of management of
the entire Group.
Governance
Information Disclosure / Dialogue
Information disclosure approach and system
The Company’s basic policy concerning information disclosure
is as follows.
We will provide our various stakeholders, including
customers and shareholders, with fair and accurate
information on corporate financial affairs, our Basic
Business Philosophy, business policies and activities,
as well as corporate social responsibility activities in a
timely, understandable and appropriate manner. At
the same time, we will listen to our customers’
requests and comments and reflect them in our
business activities. We will seek to be an enterprise
with high transparency.
(From the Panasonic Code of Conduct)
The Company clearly defines its policy on information
disclosure in the Panasonic Code of Conduct, the guideline
for putting the Group’s Basic Business Philosophy into
practice. The Company also publishes relevant practical
standards, methodologies, internal processes, etc. as its
Disclosure Policy. In accordance with this Policy, the
Company pursues constructive dialogue with all its
shareholders and investors. (For more details, please visit
the Disclosure Policy page on the Company’s website.)
Under this basic policy, we disclose information where
disclosure of this information is required by
securities-related laws and regulations of all relevant
countries and regions as well as other information that is
deemed as necessary to disclose in a fair and timely
manner while at the same time endeavoring to disclose
accurately, fairly, and sufficiently.
Moreover, the Company has established disclosure
control procedures and in the preparation and submission
of annual securities reports, quarterly and other reports, the
Disclosure Committee, which is comprised of managers
from principal departments that handle relevant
information, confirms the validity of the descriptive content
and the appropriateness of the disclosure procedures
under the supervision of the president and chief financial
officer (CFO).
Based on listing regulations, Company information that
requires timely disclosure shall be immediately reported to
the Corporate Finance & IR Department or the Financial &
Accounting Department and disclosed timely and
appropriately.
67
Panasonic Annual Report 2018
Introduction
Growth Strategy
Foundation for Growth
Results for Fiscal Year
Ended March 2018
Risk Management
At Panasonic, risk management functions in parallel with
the development and execution of management strategies.
The Company believes that by combining these two functions,
it is better positioned to accomplish its business objectives
and to enhance its corporate value.
Basic Policy
Panasonic’s founder coined numerous sayings that are still
used at the Company: “Hardship now, pleasure later,” “The
source of our failures is within us,” “There are signs before
all things,” and “Small things can create big problems; one
must be alert to signs of change and act accordingly,”
among many others. Using these ideas as a cornerstone in its
thinking, the Company conducts Group-wide risk management
activities covering its operations around the world, with the
aim of taking preemptive actions to eliminate “sources of
failure”—that is any factors that could impede the
accomplishment of business goals.
Furthermore, by appropriately disclosing risks that impact
business management to the public, improving the transparency
of its management, and reducing risks through preemptive
measures, the Company gives its stakeholders greater confidence.
Basic Framework for Risk Management
Organizational Structure
Panasonic has established the Global & Group Risk
Management Committee, which is chaired by the chief risk
management officer (CRO), and promotes risk management
throughout the entire Panasonic Group. The committee
conducts risk management that consists of annually
identifying risks that impact business activities, conducting
assessments of them based on common global standards,
and determining the priority of risks to be addressed. For
risks determined to be significant, the Company treats
them as major Group-wide risks and works to strengthen
Group-wide risk measures by monitoring the progress of
measures and making improvements.
Business Continuity Management (BCM)
The Company engages in BCM, whose goal is to prevent
a halt to the supply of products or the provision of services
when contingencies such as major natural disasters have
occurred, or, in the rare event that service has halted, to
restart operations as quickly as possible.
Plan
Do
Check
Action
Global & Group
Risk Management Committee
Risk
assessment
Selecting major
corporate risks and
monitoring measures
Promoting
measures
Monitoring
Divisional Companies /
Regional Headquarters
Risk
assessment
Selecting major
Divisional Company risks
and formulating measures
Promoting
measures
Business Divisions
Risk
assessment
Selecting major Business
Division risks and
formulating measures
Promoting
measures
Monitoring
Monitoring
Developing
and promoting
improvement
measures
Developing
and promoting
improvement
measures
Developing
and promoting
improvement
measures
Major Corporate
Risks for FY2019
• Natural disaster
(earthquakes,
tsunamis,
weather-related
disasters, etc.)
• Quality issues
• Serious fraud
• Cyberattacks
Risk Management Promotion Framework
Global & Group Risk Management Committee
Committee Chairman: Chief Risk Management Officer (CRO)
Members: Divisional Companies, Regional Headquarters, Corporate Strategy
Head Office/PBSS (professional business support section)
Secretariat
Risk Management
Promotion Office
Monitoring / evaluation
Audit &
Supervisory Board
Report on monitoring status
Auditors
Head Office
Corporate Strategy Division
PBSS (Functions)
Each Functional Division
Corporate Conferences and Committees
Disaster / Accident Countermeasures Committee
Corporate Behavior Committee
Information Security Committee
Regional Headquarters
Regional Head
Global
admini-
stration /
support
Functions
Risk
Management
Committees
Divisional Companies
Presidents
Risk Management
Committees
Regional Marketing
Companies
Regional
administration
support
Overseas Manufacturing
Companies
Functions
Business Divisions
in Japan
Panasonic Annual Report 2018 68
Governance
Compliance
Concerted efforts to ensure corporate compliance are
vital to Panasonic, based on the fact that any compliance
violation may lead to the loss of trust from our customers
and other stakeholders, or become a serious situation
that puts at risk our ability to continue operations.
Basic Policy
We at Panasonic have set down a clear set of rules for
compliance with the law and corporate ethics. We strive to
achieve thorough adherence to these rules, with the aim of
promoting fair operating practices in all countries and
regions of the world, and to realize a sustainable society.
This is the “Panasonic Code of Conduct” (refer to page 4),
which incorporates the requirements of the Organisation
for Economic Co-operation and Development (OECD)
Guidelines for Multinational Enterprises and other norms.
Organizational Structure
To ensure the dissemination of compliance and fair business
practices at the ground level throughout our worldwide
operations, we have legal departments and executives in
charge of ensuring adherence to the Code of Conduct, as
well as managers in charge of export control and other
persons responsible for supervising various other functions
in our Divisional Companies, Business Divisions, and regional
headquarters outside Japan. In fiscal 2016, Panasonic
established a centralized organization with functions for
handling compliance, risk, and governance issues that span
multiple functional divisions. This move has accelerated the
pace of support for fair operating practices in Panasonic’s
business operations. In our observance of our own Code of
Conduct, we have a global network of legal departments
and executives in charge of ensuring adherence to the
Code of Conduct, as well as managers in charge of export
control and other persons responsible for supervising various
other functions in our Divisional Companies, Business
Divisions, and regional headquarters outside Japan.
Each year, we designate September as Compliance
Awareness Month, which is marked by efforts to strengthen
our awareness of the need to observe ethical and legal
requirements. We conduct a Compliance Awareness
Survey to check the degree of compliance awareness
dissemination among our employees around the world.
Once each year, we check the status of observance and
practice of the Panasonic Code of Conduct in our business
locations around the world, and an internal control audit is
conducted by the audit corporation. In addition, to prevent
improprieties and achieve quick resolutions, we have
established hotlines for whistleblowers in our worldwide
69
Panasonic Annual Report 2018
business locations, and for our business partners. In addition
to initiatives aimed at correcting the issues that we have
discovered through such efforts at the Business Division
level, we also bring those issues together centrally and
comprehensively at our Head Office and incorporate them
into Group-wide policies with considerations on societal
conditions, and repeat this process in the pursuit of
continuous improvement. We are currently promoting
activities under the themes of preventing cartels and
preventing bribery of government officials.
Preventing Cartels
We have put the following basic policies in place in an effort
to prevent cartels, collusive bidding, and other such violations.
• Contact with competitors is allowed only in absolutely
necessary cases and subject to prior approval.
• Agreements and exchanges of information with
competitors regarding prices, quantity, and other
competition-related matters are strictly prohibited.
• One who encounters behaviors that may give rise to
suspicions of a cartel must make an objection, leave the
room, and file an internal report.
• The Company establishes whistle-blowing systems and
internal leniency systems to improve its ability to
self-regulate and conduct appropriate monitoring based
on risk assessment, thereby maintaining an effective
anti-cartel system.
Preventing Bribery of Government Officials
Even as the authorities in different countries continue to
bear down harder on corruption, with the expansion of
business in developing countries and solutions businesses
comes a higher risk of bribery of public officials.
Panasonic continues to engage in efforts to prevent
bribery of government officials through means such as
issuing bribery prevention policies from senior executives,
establishing standards and approval processes for spending
on occasions such as meals and the like with public officials,
managing business partners, and ensuring that training and
awareness-raising activities for executives and employees
are thoroughly carried out, especially for business sites
located in countries and regions that are considered to have
a high level of corruption.
Needless to say the prohibition on bribery of government
officials, as provided in the Code of Conduct, entails a
prohibition on offering benefits of any kind, including gifts,
meals and entertainment, and on receiving personal
benefits from any of our stakeholders, which would be
contrary to laws and regulations and social ethics.
Growth Strategy
Foundation for Growth
Results for Fiscal Year
Ended March 2018
CSR Management
Based on its management philosophy, Panasonic has
defined its mission as improving the quality of life in
society and contributing to the advancement of culture
around the world. Addressing various social issues, such
as easing and mitigating climate change, are positioned
as important priorities for management. By helping solve
these issues, we aim to enhance our corporate value.
Basic Policy
Our management philosophy (refer to page 4) forms the basic policy
of our CSR management activities. In order to put our
management philosophy into practice, we have established
the Panasonic Code of Conduct. In addition, Panasonic
formulated its Sustainability Policy as a written record of
its efforts to contribute to today’s society and to fulfill its
social responsibility.
Organizational Structure
For each area of activity relating to CSR—including human
rights, fair operating practices, and the environment—
Panasonic designates executive officers and functional
divisions. Each Divisional Company, Business Division,
System for the Promotion of CSR Activities
regional office, and functional division has created various
group meetings and opportunities for stakeholder engagement,
the results of which are incorporated into everyday activities.
Using PDCA cycles, these Panasonic Group constituents
monitor their progress and act autonomously.
For issues affecting the entire group for which there are
strong demands from society for us to respond, including
contributing to climate change mitigation and adaptation, as
well as to water-related issues, decisions are made at Board
of Directors’ meetings and at Group Strategy Meetings.
Concerning issues that are deemed the most material,
the Company makes an analysis of and identifies such issues
for each area of activity, and incorporates these important
issues into its operational policies. Panasonic conducts its
CSR activities with respect for worldwide guidelines and
stakeholders’ voices as a fundamental concept.
Dialogues with Stakeholders
Panasonic conducts dialogues with its wide range of
stakeholders around the world—including customers,
investors, suppliers, governments, industry bodies, NPOs,
NGOs, local communities, and employees—on various
aspects of its business.
The Company incorporates the opinions it receives into
its business activities and product development.
Board of Directors
< Supervisory Functions > < Corporate Strategy Decision-making Functions >
Decision-making on
Corporate-wide Issues
Group Strategy Meeting*
Nomination and Compensation
Advisory Committee*
* Deliberating inquiries and reporting on
results to the Board of Directors
* Complementing the decision-making of the Board of Directors
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Panasonic Annual Report 2018 70
While promoting the training and assignment of human resources from a global standpoint, Panasonic is accelerating
the training and application of staff who underpin future business growth.
In addition, the Company is working diligently to identify and mitigate any risks that could potentially have a negative impact
on society and the Company’s business, by promoting the utmost respect for human rights, supply chain management,
raising quality levels and ensuring product safety.
Human Resources Development and Diversity
Basic Policy
Managerial Promotion
To deliver products and services that contribute to the lives
of customers and societies around the world, and to develop
Panasonic’s business, it is essential for the Company to
continue developing personnel that can participate actively,
and grow, in the global business environment. It is also
essential that the Company creates an organizational
culture in which all individual employees can fully deploy
their talents regardless of age, gender, nationality, or other
attributes. Thus, Panasonic regards the promotion of
diversity as a crucial part of its business strategy, and
hence provides a broad range of opportunities for anyone
with ability and ambition, and actively strives to create a
rewarding work environment.
In fiscal 2011, Panasonic compiled this thinking into a
Global Diversity Policy. Since then, this policy has been
implemented globally.
Organizational Structure
The departments responsible for these matters consist of
the Human Resources & Industrial Relations Department
at Panasonic head office, plus the human resources
departments in each of the four Divisional Companies
(Appliances, Eco Solutions, Connected Solutions, and
Automotive & Industrial Systems) and in all Business
Divisions and affiliated companies under the Panasonic
umbrella. In addition, the Office for A Better Workstyle has
been established in the head office and work style reforms
are being instituted to help make work rewarding for each
and every employee. Further, Panasonic has established the
Human Resources Development Company as an organization
that specializes in human-resources-related development,
education and training globally for employees of all levels.
In selecting candidates for upper management and
developing upper management personnel, Panasonic has
unified its standards, systems, processes and IT on a
global basis and identifies and develops the most qualified
people without regard to age, gender or nationality while
working to ensure career development and promotion take
place in a planned manner. For example, we have
established the Panasonic Global Competencies, common
guidelines for action that are based on the Company’s
management philosophy in order to clarify leadership
competencies required of leaders as well as core
competencies for all employees. The guidelines are
intended to promote behavior change and improved
practical initiatives in every one of its leaders worldwide.
In addition, management of multiple businesses and
experience working outside one’s home country have been
clearly stated as requirements for being appointed as an
officer or promoted to upper management. By clarifying
the necessary qualifications and career path for upper
management in this way, we are accelerating training of
upper management candidates from an early career stage
and also implementation of strategic personnel rotations for
this purpose and other aspects of career development.
Moreover, multifaceted observation-based assessments
and assessments by outside agencies are conducted of
personnel who are candidates for upper management in
order to make it possible to objectively grasp strengths and
weaknesses related to leadership and other competencies.
This promotes recognition by both the Company and the
person involved of areas that need to be strengthened or
overcome as well as key training points for promotion to
upper management and encourages growth into personnel
with high levels of self-awareness and motivation.
71
Panasonic Annual Report 2018
Introduction
Growth Strategy
Foundation for Growth
Results for Fiscal Year
Ended March 2018
Global Human Resources Development
Number of Women in Managerial Positions /
Percentage of Women in Positions of Responsibility
Panasonic conducts the “Working in Japan” program to
promote business across countries and regions and
strengthen the development of leaders, who are key to this
coordination. We have also established inter-region transfer
rules to promote work in other countries.
In each country and region, we are promoting and
expanding training programs for deepening mutual
understanding with people in countries around the world.
For example, in Europe, as a part of the two-year “Talent
for Tomorrow” human resources development program,
employees are split up into project teams and each team
promotes a CSR-based project. This project is conducted
over the course of several months and is supported and
evaluated by a non-profit charitable organization.
Participating employees use their business skills to tackle
social issues and leverage the knowledge and experience
they gain from the activity in product development and
business creation.
In each region, Panasonic administers selective training
for upper management development tailored to the region
that is coordinated with the equivalent training conducted
in Japan. In addition, global measures conducted with
Japan include the Global Onboarding Program for people
hired mid-career and an e-learning service based on a
common global core knowledge system that makes it
possible for employees worldwide to acquire necessary
knowledge regardless of the time or place.
Women’s Participation in Management
The Company has implemented a “Role/Grade System”
that determines compensation based on the work or role
in which employees are currently engaged; there are no
gender-based inequalities in this compensation system.
However, particularly in Japan, Panasonic is aware that
there is a need to employ greater numbers of women in
upper management and decision-making positions; it is
striving to ensure gender diversity.
In terms of senior management, a female director
(current board member Hiroko Ota) was appointed in fiscal
2014, and, in fiscal 2016, a female executive officer
(current executive officer Michiko Ogawa) has been
named. To accelerate female participation in management,
Panasonic holds study groups for female employees and
provides career-advancement seminars for women leaders,
creating opportunities for women to encounter role models’
values and views on working, as well as further strengthening
the management capabilities of superiors.
Further, to raise the awareness of all employees with
respect to promoting diversity, July of each year is designated
Diversity Promotion Month, with forums held and opportunities
created at the workplace to discuss related issues.
6.5
404
6.7
423
6.0
354
6.9
464
7.2
493
(Persons)
600
400
200
0
(%)
7.5
5.0
2.5
0
4/’14
4/’15
4/’16
4/’18
4/’17
(As of April 30 for each year)
Number of Women in Managerial Positions
Percentage of Women in Positions of Responsibility
Note: Managerial position is defined as section leader or higher. Positions
of responsibility include positions such as chief or assistant chief.
Total of Panasonic Corporation and its key domestic Group
companies.
“e-Work” for Diverse Working Styles
Panasonic is utilizing information and communications
technologies to promote “e-Work” as an efficient working
style not restricted by time or place, and has instituted a
Work-at-Home System that applies to approximately
40,000 employees. “Spot Offices” have also been set up in
17 locations (16 locations in Japan). The offices are equipped
with equipment and network connectivity that make it
possible for employees to work while on business trips.
This has successfully reduced travel times and sped up
customer service, and we intend to further enhance the
infrastructure for conducting work efficiently going forward.
Through accelerating adoption of diverse and flexible work
styles, we will further raise productivity and help employees
achieve work-life balance.
Panasonic Annual Report 2018 72
Social Initiatives
Respect for Human Rights
Supply Chain Management
Basic Policy
Basic Policy
Panasonic supports the fundamental principles of the
United Nations Universal Declaration of Human Rights, the
International Labour Organization (ILO) Declaration on
Fundamental Principles and Rights at Work, and the OECD
Guidelines for Multinational Enterprises. The major parts of
these principles are embodied in the Panasonic Code of
Conduct. Panasonic is also taking an active approach to
incorporating ideas concerning global human rights into its
management, including by making reference to the Guiding
Principles on Business and Human Rights, which were
adopted by the UN Human Rights Council in June 2011.
With social responsibility in procurement, including consideration
for the environment and human rights, good labor conditions
and fair trade, being expected from society, Panasonic is
working to conduct its business with suppliers that not only
provide excellent technology and quality, but also honor
social responsibilities including human rights and labor,
safety and health, green procurement, clean procurement
and information security. Panasonic considers the promotion
of CSR in its procurement departments to be crucial and
conducts periodic management reviews.
Organizational Structure
The departments responsible consist of the Human Resources
& Industrial Relations Department established at the
Panasonic head office, the human resources departments
established at each of the four Divisional Companies
(Appliances, Eco Solutions, Connected Solutions, and
Automotive & Industrial Systems), and all Business Divisions
and affiliated companies under the Panasonic umbrella.
In addition, Panasonic has established an Equal
Employment Opportunity Office at its head office and
appointed full-time consultants to staff it. In addition, a
consultation desk has been established at each Divisional
Company and Business Division in an effort to provide a
place for employees and temporary staff to go to discuss
any concerns relating to human rights and all forms
of harassment.
Initiatives for the Prevention of Modern Slavery
Modern slavery can occur in various forms including
servitude, forced or compulsory labor and human
trafficking, all of which include the deprivation of a person’s
(an adult or child’s) liberty by another. Panasonic is
committed to a work environment that is free from modern
slavery in accordance with the laws and regulations of the
respective countries in which it operates.
Panasonic will not knowingly use modern slavery in any
of its products and/or services supplied, nor will it accept
commodities, products and/or services from suppliers that
it believes to engage in acts of modern slavery.
Organizational Structure
The department responsible is the Global Procurement
Company. Each of the Divisional Companies and their
Business Divisions and other affiliated companies has its
own procurement department. The Global Procurement
Company is responsible for CSR procurement activities at
the Group-wide level. It works together with the Divisional
Companies and their Business Divisions and other affiliated
companies to strengthen efforts in this area.
Each Divisional Company and Business Division draws
up plans to follow and promote the Group-wide rules and
manuals, in order to keep the PDCA cycle in motion.
Main Initiatives
Panasonic has suppliers signal their agreement with the
Supply Chain CSR Promotion Guidelines, which set forth
the Company’s management philosophy, CSR procurement
policies, and supplier requirements, and also requests that
suppliers conduct CSR self-assessments before transactions
commence. Further, the Company signs a Standard Purchase
Agreement with each of its suppliers that includes items
related to CSR such as human rights, safe working
environments, and consideration for the environment.
In addition, Panasonic conducts regular evaluations of
supplier initiatives related to CSR alongside evaluations of
assessment standards for quality, cost, delivery, and service
(QCDS) and business results.
With regard to conflict minerals that fund organizations
that behave without proper regard for human rights, engage
in environmental destruction, practice corruption, and
otherwise act unethically in conflict zones, the Company
strives to adhere to the Organisation for OECD’s Due
Diligence Guidance for Responsible Supply Chains of
Minerals from Conflict-Affected and High-Risk Areas.
73
Panasonic Annual Report 2018
Introduction
Growth Strategy
Foundation for Growth
Results for Fiscal Year
Ended March 2018
Raising Quality Levels and Ensuring Product Safety
Basic Policy
Panasonic’s Group-wide Quality Policy states that the
Company will “truly serve customers by way of providing
products and services that continuously meet and satisfy
the needs of customers and society.” The Company has
also established a basic policy regarding the autonomous
code of conduct for product safety. Under this policy,
Panasonic actively strives to ensure the safety of its products,
keeping to its principles of “the customer comes first” and
of maintaining a “super-honest” attitude.
Organizational Structure
With the support and governance of the Panasonic head
office, each Divisional Company and Business Division has
implemented systems for undertaking its business with
independent responsibility and self-sufficiency. Since
September 2014, regional quality administration managers
have been appointed for six regions: North America; Latin
America; Europe and CIS; Southeast Asia and Oceania;
India, South Asia, Middle East and Africa; and China and
Northeast Asia. These managers monitor regional quality
conditions and promptly share information on product
safety-related defects with the various business operations.
They also share information on public safety standards
Quality Management Structure
President
Divisional
Companies
Divisional Company
Presidents
Divisional Company
Chief Quality Officers
Quality Control Division
Business
Divisions
Business Division Directors
Quality Assurance Division
Overseas Companies
Quality Assurance Division
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Head Office
Chief Quality Officer (CQO)
Quality &
Environment Division
Product Safety &
Quality Department
Regional Headquarters
Regional Quality
Administration Manager
and public safety certifications in the regions on a timely
basis, reinforcing the organizational structure of the
business operations.
Quality Management System
To establish self-sufficient quality assurance processes in
each Divisional Company and Business Division, Panasonic
published its Quality Management System (P-QMS)
Guidelines in 2004. The guidelines set forth a quality
management system for achieving quality levels required
by Panasonic and include proprietary quality assurance
processes and expertise in addition to ISO 9001 requirements.
The guidelines continue to be revised in accordance with
changes to the ISO 9001: 2015 standard.
The Divisional Companies and Business Divisions
formulate their own quality assurance systems based on
the guidelines matched to the characteristics of their
respective businesses. Quality assessments and internal
audits are conducted at various levels, corporate, Divisional
Company and Business Division, in order to verify system
progress as a part of efforts to continually improve quality.
The guidelines are comprised of a Group-wide section
that applies in common to the entire organization and
sector standards formulated for items specific to individual
businesses, including consumer electronics, automotive,
housing, devices, B2B solutions, and pharmaceuticals. To
effectively accommodate further business diversification,
Panasonic works to ensure the guidelines continue to
evolve in line with its business areas.
ISO 26262*1 Road Vehicle Functional Safety
Certification Acquired
Panasonic acquired process certification under the ISO
26262 standard for road vehicle functional safety*2 through
the German third-party organization TÜV SÜD. The Company
is now recognized as being capable of complying up to the
standard’s highest safety level, ASIL-D, in development
processes for automotive devices and device software.
*1 International standard for road vehicle functional safety issued on
November 15, 2011. The standard stipulates the Automotive Safety
Integrity Level (ASIL) in four ranks (ASIL A to ASIL D).
*2 Safety realized through the functioning of microcomputers and other
electrical and electronic devices. Failure detection, safe stopping
control, and user warnings are examples of such functions.
Panasonic Annual Report 2018 74
Various environmental issues, including climate change, resource depletion and water shortages, are becoming
increasingly serious.
Panasonic conducts business activities that consider the environment and works to solve environmental issues through
its products and services with the aim of fulfilling its corporate social responsibilities and reducing management risk.
Basic Policy
Principles and Plans
Long-Term Vision
On the basis of a management philosophy of contributing
to society as a public entity of society, Panasonic has
established policies and plans related to the environment
and carries out corresponding initiatives. It issued its
Environmental Statement in fiscal 1992 to communicate its
stance to society of addressing not only the pollution problem
but also global environmental problems like climate change
and resource recycling. In addition, in fiscal 2014, the Company
established its new Environmental Action Guideline along
with a new brand slogan, “A Better Life, A Better World,”
and clarified its stance of addressing five environmental
issues, CO2 reduction and resource recycling, primarily,
and also water, chemical substances and biodiversity.
Specific initiatives are being carried out on the basis of
the Green Plan 2018, which has a target year of fiscal 2019.
The plan has been revised to address internal and external
changes since it was established in fiscal 2011. Most recently,
it was revised in fiscal 2017 in light of increasing societal
demand for CO2 reductions against the backdrop of the
Paris Agreement, which was adopted at the 21st Conference
of the United Nations Framework Convention on Climate
Change (COP21) in December 2015, and of changes in
Panasonic’s business composition with expanding automotive
and B2B-related businesses.
Environmental Action Guideline
Toward achieving a sustainable society, we will strive to develop
our business through the creation of environmental value.
For this purpose, we will address environmental challenges through
our business activities and will expand our environmental initiatives
based on collaboration with stakeholders.
Initiatives to address
environmental challenges
Initiatives based on collaboration
with stakeholders
Reducing CO2
emissions
emissions
Resource
recycling
recycling
Water
Water
Chemical
Chemical
substances
substances
Biodiversity
Biodiversity
×
×
Customers
Customers
Supply
Supply
chain
chain
Locaal
Local
communities
communities
The high level of interest in the Paris Agreement and
Sustainable Development Goals (SDGs) is indicative of a
deepening of environmental and energy problems around
the globe. Even at the World Economic Forum held in
January 2018, a gathering of world political and economic
leaders, abnormal weather, natural disasters and global
warming were the risks cited with the greatest potential
impact, and activities are starting around the world to
develop thoroughgoing countermeasures.
Amid these developments, Panasonic in fiscal 2018
established the Panasonic Environment Vision 2050.
The vision calls for the Company to endeavor toward the
achievement of both “a better life” and “a sustainable
global environment” and to create more energy than it uses
by 2050. At present, the total amount of energy Panasonic
creates is less than one-tenth of the total amount it uses.
Going forward, the Company will reduce energy used through
technology development that raises the energy-saving
performance of products and through innovations to
manufacturing processes, while expanding energy creation
and storage businesses and contributing to the construction
of new social infrastructure, including the hydrogen society,
to increase opportunities for utilizing clean energies and
thereby further increase energy created.
Panasonic Environment Vision 2050
To achieve “a better life” and “a sustainable global environment,”
Panasonic will work towards
creation and more efficient utilization of energy
which exceeds the amount of energy used,
aiming for a society with clean energy and a more comfortable lifestyle.
Energy used
Energy created
Energy used in Panasonic
business activities like production
and energy used by Panasonic
products through its customers
Clean energy created and/or
made available by Panasonic
products and services such as
photovoltaic power generation
systems, storage batteries and
energy solutions
Environmental Action Plan “Green Plan 2018”
75
Panasonic Annual Report 2018
Introduction
Growth Strategy
Foundation for Growth
Results for Fiscal Year
Ended March 2018
Organizational Structure
Eco-conscious Products
Promotion System of
Environmental Sustainability Management
Green Products
Panasonic formulates its annual environmental management
policy in accordance with the Group management policy,
Panasonic Environment Vision 2050, Environmental Action
Guideline, and the environmental action plan, “Green Plan
2018.” The annual environmental policy is shared across the
entire organization through the Operation Policy Meeting
led by the executive officer in charge of environmental
affairs, who has authority delegated from the president.
Divisional Companies, Business Divisions, and regional
headquarters outside Japan establish their own environmental
Policies and targets based on this Group policy, and plan
and promote their activities accordingly.
The Group Strategy Meeting, whose members include
the president and Divisional Company presidents, checks
progress and makes decisions on important policies in
connection with the Green Plan 2018 and Environment
Vision 2050. In addition, the Environmental Compliance
Administrators Meeting is held twice a year by the executive
officer in charge of environmental affairs and environmental
compliance administrators at the four Divisional Companies,
which make expeditious decisions on Group-wide
environmental management. Further, at the Global
Environmental Working Committee Meeting, environmental
compliance administrators and environmental operation
administrators of the four Divisional Companies and regional
headquarters share and discuss their successful initiatives
and issues they have faced, and other related matters. A
PDCA management cycle is implemented to further raise
the overall level of Group-wide environmental management.
Promotion System for Environmental Sustainability
Management in Fiscal 2019
Board of Directors Meeting
President
Corporate Strategy Head Office
Professional Business Support Sector
Quality & Environment Division
Operation policy meeting
Risk and Governance Management Division
Global Procurement Company
others
Innovation Promotion Sector
Production Engineering Division
Technology Innovation Division
others
Group
Strategy
Meeting
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Business Division
Business Division
Business Division
Business Division
Business Division
Sales
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Region
Cooperation
Environmental Conference Administrators Meeting
Related job function
Global Environmental Working Committee Meeting
Issue-Specific promotion system
Product Chemical Substance Management Committee
Co-
working
Product Environmental Law Working Group
Manufacturing Environmental Information Sharing Group
Panasonic ECO-RELAY Corporate Promotion Committee
Quality
Production engineering
Procurement
Logistics
Human resources
Public Relations
Panasonic conducts product environmental assessments to
evaluate in advance, from the stage of planning and design,
the impact of products on the environment, and works to
raise their environmental performance. Among products
and services with enhanced environmental performance,
Panasonic has specifically defined as “Strategic GPs”
1) products and services that reduce environmental impact
with top-level environmental performance, 2) products
and services whose promotion and dissemination lead to
reducing environmental impact, and 3) products and services
that reduce environmental impact in a specific region, and
is working to increase sales of them. In fiscal 2018, sales of
Strategic GPs constituted approximately 21% of consolidated
net sales.
Among Strategic GPs, products that particularly create
new trends are certified as “Super GPs.” In fiscal 2018, the
following three products earned the certification.
Examples of Super GPs
FA Servo with Substantially Less Metal
The MINAS A6 family of FA servos offers high basic
performance, including the industry’s smallest motor size,
and is produced with a substantially lower amount of metal
materials, including magnets, iron and copper wire, while
also achieving cost reductions.
“freeze-ray” Low Energy Consumption Data Archiver
Along with high capacity, high reliability and high-speed data
transfer, freeze-ray uses optical discs made of a material with
a long, 100-year lifespan, which reduces use of resources
at replacement. It also features low energy consumption,
reducing the cost to the customer and CO2 emissions.
Air Quality Improvement Products with PM2.5
Purification Function
These products have achieved
a PM2.5 removal rate of 98%,
among the highest levels of
purification performance in the
industry, to address the
problem of PM2.5, one of the
causes of air pollution in China.
Over a short two-year period,
25 different models have been
developed and sold and are
helping to improve the indoor
environment in China.
Wall-mounted energy recovery ventilator (ERV)
Panasonic Annual Report 2018 76
Environmental Initiatives
Initiatives to Address Environmental Challenges
which has contributed to cost reductions as well.
One example of a progressive initiative to create a
zero-CO2 factory is Panasonic do Brasil Limitada’s use
of renewable energy sources for 100% of the power
it consumes.
CO2 Reduction Targets
CO2 emissions from use of Panasonic products
30% reduction by 2030 (compared to fiscal 2014)
CO2 emissions from Panasonic business activities
30% reduction by 2030 (compared to fiscal 2014)
Zero by 2050
Size of Contribution in Reducing CO2 Emissions through
Products and Services
(Million tons)
80
60
40
20
0
60.97
17.10
43.87
3/’14
3/’15
3/’16
3/’17
3/’18
(Years ended March 31)
Size of direct contribution in reducing CO2 emissions
Size of indirect contribution in reducing CO2 emissions
CO2 Emissions in Production Activities and
CO2 Emissions per Basic Unit
(Million tons)
5
4
3
2
1
0
86.0%
2.28
(%)
100
75
50
25
0
3/’14
3/’15
3/’16
3/’17
3/’18
CO2 emissions (left scale)
CO2 emissions per basic unit (right scale)
(Years ended March 31)
Note: CO2 emissions per basic unit (compared to fiscal 2014) is calculated
using the weighted average of improvement rates compared to
fiscal 2014 in CO2 emissions per basic unit, which is calculated by
dividing CO2 emissions by the volume of activity closely related to
CO2 emissions, including production amounts and volumes, etc.
of each factory.
CO2 Reduction
Basic Approach and Targets
The Paris Agreement sets out a target of limiting global
temperature increases to less than 2°C above pre-industrial
levels and a more ambitious target of keeping global
temperature increases to less than 1.5°C above pre-industrial
levels, as well as sets a goal of virtually zero for CO2 and
other greenhouse gas emission levels for the second half of
this century. To achieve these targets, companies are required
to make further contributions to reducing CO2 emissions.
Along with its Environment Vision 2050, in fiscal 2018
Panasonic established new long-term CO2 reduction
targets in line with the Paris Agreement, and in October
2017 they were certified as SBT*.
* SBT stands for Science Based Targets, which are company greenhouse
gas reduction targets consistent with scientific knowledge.
Reductions to CO2 Emissions from Product Use
Panasonic has instituted a unique indicator, “size of
contribution in reducing CO2 emissions,” to maximize its
contribution to CO2 reduction through its products.
There are two types of CO2 reduction contributions,
direct and indirect. The former refers to CO2 reductions
through energy conservation and energy creation with
Panasonic products, including its energy-saving appliances,
solar cells and fuel cells. The latter is CO2 reductions from
the products of other companies that are supported
by Panasonic products. This includes specifically air
conditioning load reduction effects from improved insulation
performance in Panasonic housing, energy-saving effects
from products by other companies equipped with Panasonic
energy-saving compressors and motors, and improved
fuel economy effects from electric vehicles equipped with
Panasonic automotive batteries. In fiscal 2019, combining
these direct and indirect contributions, the Company is
targeting contributions to CO2 reduction of 55.0 million tons.
Reductions to CO2 Emissions in Business Activities
The Green Plan 2018 establishes CO2 emissions per basic
unit (CO2 emissions per unit of production volume) as a
target indicator for CO2 reductions in production activities
and sets a target for fiscal 2019 of a reduction of 5% or
more compared to fiscal 2014 (reduction of 1% or more on
average per year).
Panasonic is working to reduce CO2 emissions and
achieve the target through measures such as individual
initiatives at the factory level, horizontal development of
exceptional initiatives throughout the Company, and training
of specialized personnel. Panasonic is also promoting
introduction of renewable energies such as solar cells. As a
result of these activities, CO2 emissions per basic unit in
fiscal 2018 was 14% lower than in fiscal 2014. The amount
of energy consumption itself has also been steadily reduced,
77
Panasonic Annual Report 2018
Introduction
Growth Strategy
Foundation for Growth
Results for Fiscal Year
Ended March 2018
Resource Recycling
Societal concern about resources has been rising as
economies grow rapidly around the globe. New mining of
resources not only places a substantial impact on the
environment, problems also occur like the depletion of
mineral resources and sharp increases in resource prices.
Against this backdrop, Panasonic has made
recycling-oriented manufacturing one of its key tasks
alongside CO2 reduction, regarding this as the responsibility
of a manufacturer that uses large amounts of resources.
This task has three aspects: minimizing total resources
used while maximizing recycled resources, eliminating
landfill disposal of waste from production activities, and
recycling used products.
The Green Plan 2018 sets a target for use of recycled
plastics to further promote realization of recycling-oriented
manufacturing, and the Company is working to increase its
use. Specifically, in recycling used home appliances, resin
recycling is being promoted through coordination between
Panasonic Eco Technology Center Co., Ltd. (PETEC),
which is the Company’s appliance recycling facility, and the
Appliances Company’s Kato Plastic Recycling Factory, in
order to effectively utilize plastics in addition to iron, copper,
aluminum and other metals.
Going forward, Panasonic will continue to promote
utilization of recycled plastics as an initiative to both
help reduce environmental impact and stabilize raw
material procurement.
Water Conservation
The amount of usable fresh water on the earth is just 0.01%
of its total water resources. In the Global Risks Report
published each year by the World Economic Forum, the
water crisis is cited as one of the global risks having the
most impact on the world. Panasonic is working to protect
water resources through both its products and its production
activities in order to fulfill its corporate social responsibilities
and reduce management risk.
Under the Green Plan 2018, Panasonic is striving to
increase sales of products that contribute to water
conservation and water recycling. In production activities,
it is working to reduce water usage and increase use of
recycling. Water used at factories in fiscal 2018 was 25.84
million m3, a reduction of 5.4% compared to the previous
fiscal year.
In addition, in fiscal 2018, water risk assessment being
conducted from a risk management standpoint was
completed. Water risk was assessed in its diverse aspects
at all of Panasonic’s manufacturing sites, including physical
risks like water shortages and water-related regulatory risks.
As a result, though water risk that could impact the
Company’s business activities has not emerged, in regions
where the impact of water risk was determined to be
significant, Panasonic intends to continue to monitor trends
and work to reduce management risk.
Chemical Substance Management and Reduction
With concern over the negative impact on human health
and the environment, regulations and societal demands are
mounting with respect to the management and reduction
of harmful substances, examples being the EU’s RoHS
Directive*1 and REACH*2.
Panasonic actively acquires information on chemical
substances contained in the parts and raw materials its uses.
For substances that products are not allowed to contain by
law in major developed countries, the Company conducts
management to ensure they are not used or included on a
global basis, except in certain unavoidable cases when using
an alternative would not be feasible. In addition, Panasonic
is currently conducting impact assessments on managed
substances based on the application and amount used and
is planning to reduce or prohibit use of substances whose
impact on people and the environment cannot be ignored.
For example, four types of phthalic esters, which are
often contained in PVC materials, will be regulated by the
RoHS Directive starting in July 2019. The Company is
developing a system for switching to alternative substances
and preventing admixture in order to prohibit their delivery
starting in July 2018, before the regulation goes into effect.
It is also switching to alternatives for other phthalic esters
as well in anticipation of the possibility of future regulations.
*1 The Restriction of Hazardous Substances (RoHS) Directive is a directive
established by the EU related to the restricted use of certain hazardous
substances included in electrical and electronic equipment.
*2 Registration, Evaluation, Authorization and Restriction of Chemicals
(REACH) is a regulation established by the EU on the registration,
assessment, approval and restriction of chemical substances.
Panasonic Annual Report 2018 78
Examples of Initiatives Aimed at Addressing Social Issues (Relationship with SDGs)
Based on its management philosophy, Panasonic is committed to resolving social issues through its business activities.
Engaged in a wide range of businesses worldwide, the Company is also working to help achieve the Sustainable
Development Goals (SDGs) adopted by the United Nations.
Example Initiatives
Main Activities
Contributions to Creation of Clean Energy Society
While reducing the amount of energy that we use, we are promoting
the creation and utilization of clean energy and aiming to realize a
society with clean energy and a more comfortable lifestyle. Looking
ahead to 2050, Panasonic works toward the creation of energy
which exceeds the amount of energy used.
Reduction of energy used: Provision of products featuring high
energy-saving performance and energy management systems,
promotion of energy saving at our factories and offices
Expansion of energy created (increase in opportunities to utilize
clean energy): Provision of battery systems for eco-cars,
photovoltaic systems and fuel cells
Providing A Better Life in Entire Towns
To resolve social issues and improve the value of entire communities,
we are promoting the creation of towns that continue to develop
through co-creation with partner companies, public organizations,
universities and residents.
Contributions to Creation of
Safe Transportation Societies
We develop and provide solutions that make driving safer and more
secure by combining highly developed technologies, for example in
sensing, image recognition and communications, and conveying
easily understood information to users
Improving the Productivity of
Corporate Customers
Drawing on the know-how amassed in the manufacturing industry
as well as robotics technologies, we are working to innovate the
production, transportation, and selling processes of customers,
who confront such wide-ranging challenges as increasingly diverse
and sophisticated consumer needs and a shortage of labor. At the
same time, we are endeavoring to improve productivity on the
operational frontlines and continuously create value.
Contributions to Creation of
Recycling-Oriented Society
As the duty of a manufacturer who uses a large volume of resources,
we are promoting the reduction of the total resources used, product
recycling, expanding the amount of recycled resources used in
our products with the aim of contributing to the sustainable use
of resources.
Contributions to Creation of
Societies That Respect Human Rights
As a corporate group that conducts business on a global basis,
we are promoting initiatives aimed at respecting human rights
and decent work that take entire supply chains into
consideration.
Contributions to Creating Societies in Which
Diverse People Actively Participate
While respecting people’s diversity, we are working to become a
corporate group where people who have diverse characters and
abilities get together and actively participate through a variety of
systems and efforts geared toward inclusion.
Having established Sustainable Smart Towns (SSTs) in the cities
of Fujisawa and Yokohama (Tsunashima) in Japan, we provide
solutions that contribute to energy, security, mobility, wellness
and community
We are now deploying the knowhow gained from having established
the SSTs on a global basis, including in Europe and the Americas
(for example in Denver in the United States), China, India and
Southeast Asia
Provision of Advanced Driver Assistance System (ADAS), for
which we utilize camera/sensing technologies and image
processing technology
Further safety improvements through the development of
communications technology that focuses on connectivity,
whereby cars and networks are interlinked
Provision of ITS solutions that support safety
Manufacturing: Improving productivity by visualizing real-time
production frontline operating status and other data to secure
improvements in a timely manner
Logistics: Working to increase efficiency and save labor in the
fields of onsite warehousing, transportation, and delivery in the
logistics industry, which is experiencing a sharp increase in
items handled
Distribution: Co-developing new business models and services
in the distribution industry based mainly on systems solutions
that are supported by advanced products and ICT
To minimize total resources used, we promote reductions in the
size and weight of our products
Globally promoting the recycling of home appliances that are no
longer used
Providing products whose resources (including plastic and iron)
are recovered from used products under the concept “Product
to Product”
Reduction in amount of waste generated at factory, improvement
of recycling rate
Initiatives to prevent forced labor, child labor
Protecting rights of workers, including foreign migrant workers
Occupational health and safety management
Promotion of women’s participation in management (including
the holding of study groups for female employees, career
advancement seminars for female managers)
Creation of workplaces that facilitate work regardless of
employees’ sexual orientation/gender identity
Creation of workplaces that enable employees with disabilities to
actively participate
Being of Service through Corporate
Citizenship Activities
By donating our own products and by providing management
expertise to organizations working on solving social issues, we aim
to eliminate poverty and increase educational opportunities in
emerging and developing countries, while we are helping to build a
sustainable society in which each of the individuals can become
independent.
100 Thousand Solar Lanterns Project / Off-grid Solutions Project /
Bringing Light to People (helping to solve social problems in
developing countries by solar power generation)
Panasonic NPO/NGO Support Fund for SDGs (support for
strengthening the organizational capacity of NPOs and NGOs
aiming to eliminate poverty)
Sustainable Seafood (protection of fisheries resources by the
utilization of certified marine products)
79
Panasonic Annual Report 2018
Introduction
Growth Strategy
Foundation for Growth
Results for Fiscal Year
Ended March 2018
SDGs to Which We Contribute
Detailed Information
Annual Report 2018
Page 75 Basic Policy
Pages 77-78 Initiatives to Address
Environmental Challenges
Website
Panasonic Environment Vision 2050
CO2 Reduction
Website
Fujisawa SST
Tsunashima SST
CityNOW Project
Website
Bringing Personal Safety to Our Driving
Society
Website
Business Solutions (Japanese Version Only)
Annual Report 2018
Pages 77–78 Initiatives to Address
Environmental Challenges
Website
Resources Recycling
Annual Report 2018
Page 73 Respect for Human Rights
Page 73 Supply Chain Management
Website
Respect for Human Rights
Annual Report 2018
Pages 71-72 Human Resources
Development and Diversity
Website
Human Resources Development and
Promoting Diversity
Inclusion & Diversity
(Japanese Version Only)
Website
100 Thousand Solar Lanterns Project
Off-grid Solutions Project
Bringing Light to People
Panasonic NPO/NGO Support Fund for
SDGs (Japanese Version Only)
Sustainable Seafood
(Japanese Version Only)
Panasonic Annual Report 2018 80
10-Year Financial Summary
Panasonic Corporation and Subsidiaries, Years ended March 31
Panasonic began applying International Financial Reporting Standards (IFRS) on a voluntary basis in the fiscal year ended March 2017.
Financial figures for the fiscal year ended March 2016 are also presented in accordance with IFRS standards in addition to conventional U.S. GAAP standards.
U.S. GAAP
For the Year (Millions of yen)
Net sales
Operating profit
Income (loss) before income taxes
Net income (loss) attributable to
Panasonic Corporation
Capital investment
Depreciation
R&D expenditures
Free cash flow
At Year-End (Millions of yen)
Interest-bearing debt
Cash and cash equivalents
Total assets
Panasonic Corporation shareholders’ equity
Total equity
Per Share Data (Yen)
Net income (loss) attributable to Panasonic
Corporation per common share:
Basic
Diluted
Dividends declared per share
Panasonic Corporation shareholders’ equity per share
Financial Indicators
Operating profit/sales (%)
Income (loss) before income taxes/sales (%)
ROE (%)
Net income (loss) attributable to
Panasonic Corporation/sales (%)
Total asset turnover ratio (Times)
Financial leverage (Times)
Interest-bearing debt/total assets (%)
Panasonic Corporation
shareholders’ equity/total assets (%)
Payout ratio (%)
Exchange Rate (Yen)
1 USD
1 EUR
1 RMB
Notes to U.S. GAAP
3/2009
3/2010
3/2011
3/2012
3/2013
3/2014
7,765,507
72,873
(382,634)
7,417,980
190,453
(29,315)
8,692,672
305,254
178,807
7,846,216
43,725
(812,844)
7,303,045
160,936
(398,386)
7,736,541
305,114
206,225
(378,961)
(103,465)
74,017
(772,172)
(754,250)
120,442
494,368
325,835
517,913
(352,830)
385,489
251,839
476,903
198,674
403,778
284,244
527,798
266,250
333,695
295,808
520,217
(339,893)
310,866
277,582
502,223
355,156
217,033
278,792
478,817
594,078
745,665
973,867
6,403,316
2,783,980
3,212,581
1,327,992
1,109,912
8,358,057
2,792,488
3,679,773
1,595,269
974,826
7,822,870
2,558,992
2,946,335
1,575,615
574,411
6,601,055
1,929,786
1,977,566
1,143,395
496,283
5,397,812
1,264,032
1,304,273
642,112
592,467
5,212,994
1,548,152
1,586,438
(182.25)
(182.25)
30.00
1,344.50
(49.97)
–
10.00
1,348.63
35.75
–
10.00
1,236.05
(333.96)
–
10.00
834.79
(326.28)
–
0
546.81
52.10
–
13.00
669.74
0.9
(4.9)
(11.8)
(4.9)
1.1
2.1
11.6
43.5
–
101
143
–
2.6
(0.4)
(3.7)
(1.4)
1.0
2.6
15.9
33.4
–
93
131
–
3.5
2.1
2.8
0.9
1.1
3.0
20.4
32.7
28.0
86
113
–
0.6
(10.4)
(34.4)
(9.8)
1.1
3.2
23.9
29.2
–
79
109
–
2.2
(5.5)
(47.2)
(10.3)
1.2
3.8
21.2
23.4
–
83
107
13.3
3.9
2.7
8.6
1.6
1.5
3.8
12.3
29.7
25.0
100
134
16.4
1. The Company’s financial statements were prepared in conformity with U.S. generally
accepted accounting principles (U.S. GAAP) until the fiscal year ended March 2016.
2. In order to be consistent with generally accepted financial reporting practices in Japan,
operating profit, a non-GAAP measure, is presented as net sales less cost of sales and
selling, general and administrative expenses. The Company believes that this is useful
to investors in comparing the company’s financial results with those of other Japanese
companies. See the Company’s annual securities report and financial announcements
for the details.
3. The Company defines capital investment as purchases of property, plant and equipment
based on an accrual basis which reflects the effects of timing differences between acquisition
date and payment date.
4. Capital investment and depreciation do not include intangibles.
5. Dividends per share reflect those declared by Panasonic in each fiscal year and consist of interim
dividends paid during the fiscal year and year-end dividends paid after the fiscal year-end.
6. Exchange rate is the average rate for the fiscal year.
7. Due to the adoption of the provisions of FASB Accounting Standards Codification (ASC)
810, “Consolidation,” fiscal 2009 has been restated.
8. SANYO Electric Co., Ltd. (SANYO) and its subsidiaries became consolidated subsidiaries
of Panasonic in December 2009. The operating results of SANYO and its subsidiaries prior
to December 2009 are thus not included in Panasonic’s consolidated financial statements.
9. “Diluted net income (loss) attributable to Panasonic Corporation common shareholders
per share” from fiscal 2010 to fiscal 2014 has been omitted because the Company did
not have potential common shares that were outstanding for the period.
10. Effective from the beginning of fiscal 2013, investments and depreciation expenses in
molding dies are included in “Capital investment” and “Depreciation (tangible assets),”
respectively. Accordingly, the amounts of “Depreciation (tangible assets)” and “Capital
investment” for fiscal 2012 are changed.
11. Payout ratios have not been presented for those fiscal years in which the Company
incurred a net loss attributable to Panasonic Corporation.
12. Interest-bearing debt is equal to the sum of short-term debt, including current portion of
long-term debt, and long-term debt.
13. Formulas for financial ratios are as follows:
Operating profit ratio = Operating profit / Net sales
ROE (Return on equity) = Net income (loss) attributable to Panasonic Corporation / Average Panasonic
Corporation shareholders’ equity at the beginning and the end of each fiscal year
Total assets turnover = Net Sales / Average total assets at the beginning and the end of each fiscal year
Financial leverage = Average total assets at the beginning and the end of each fiscal year / Average
Panasonic Corporation shareholders’ equity at the beginning and the end of each fiscal year
Interest-bearing debt ratio = Interest-bearing debt / Total assets
Payout ratio = Dividends declared per share/Basic net income attributable to Panasonic Corporation
common shareholders per share
81
Panasonic Annual Report 2018
Growth Strategy
Foundation for Growth
Results for Fiscal Year
Ended March 2018
3/2015
3/2016
7,715,037
381,913
182,456
7,553,717
415,709
217,048
179,485
193,256
226,680
242,149
457,250
353,455
248,794
235,033
449,828
124,406
972,916
1,280,408
5,956,947
1,823,293
1,992,552
725,919
1,014,264
5,596,982
1,705,056
1,854,314
77.65
77.64
18.00
788.87
83.40
83.39
25.00
734.62
5.0
2.4
10.6
2.3
1.4
3.3
16.3
30.6
23.2
110
139
17.7
5.5
2.9
11.0
2.6
1.3
3.3
13.0
30.5
30.0
120
133
18.9
IFRS
For the Year (Millions of yen)
Net sales
Operating profit
Profit before income taxes
Net profit attributable to
Panasonic Corporation stockholders
Capital investment
Depreciation
R&D expenditures
Free cash flow
At Year-End (Millions of yen)
Interest-bearing debt
Cash and cash equivalents
Total assets
Panasonic Corporation stockholders’ equity
Total equity
Per Share Data (Yen)
Earnings per share attributable to Panasonic
Corporation stockholders:
Basic
Diluted
Dividends declared per share
Panasonic Corporation stockholders’ equity per share
Financial Indicators
Operating profit/sales (%)
Profit before income taxes/sales (%)
ROE (%)
Net profit attributable to
Panasonic Corporation stockholders/sales (%)
Total asset turnover ratio (Times)
Financial leverage (Times)
Interest-bearing debt/total assets (%)
Panasonic Corporation
stockholders’ equity/total assets (%)
Payout ratio (%)
Exchange Rate (Yen)
1 USD
1 EUR
1 RMB
3/2016
3/2017
3/2018
7,626,306
230,299
227,529
7,343,707
276,784
275,066
7,982,164
380,539
378,590
165,212
149,360
236,040
252,905
238,214
438,851
125,551
311,641
224,405
436,130
(34,746)
392,234
226,576
448,879
(35,646)
724,841
1,012,666
5,488,024
1,444,442
1,647,233
1,124,004
1,270,787
5,982,961
1,571,889
1,759,935
1,239,444
1,089,585
6,291,148
1,707,551
1,882,285
71.30
71.29
25.00
622.34
64.33
64.31
25.00
673.93
101.20
101.15
30.00
732.12
3.0
3.0
11.1
2.2
1.3
3.8
13.2
26.3
35.1
120
133
18.9
3.8
3.7
9.9
2.0
1.3
3.8
18.8
26.3
38.9
108
119
16.1
4.8
4.7
14.4
3.0
1.3
3.7
19.7
27.1
29.6
111
130
16.8
Notes to IFRS
1. The Company’s consolidated financial statements are prepared in conformity with
International Financial Reporting Standards (IFRS).
2. The Company defines capital investment as purchases of property, plant and equipment
based on an accrual basis which reflects the effects of timing differences between
acquisition date and payment date.
3. Capital investment and depreciation do not include intangibles.
4. Dividends per share reflect those declared by Panasonic in each fiscal year and consist
of interim dividends paid during the fiscal year and year-end dividends paid after the
fiscal year-end.
5. Exchange rate is the average rate for the fiscal year.
6. Interest-bearing debt is equal to the sum of short-term debt, including current portion of
long-term debt, and long-term debt.
7. Formulas for financial ratios are as follows:
Operating profit ratio = Operating profit / Net sales
ROE (Return on equity) = Net profit attributable to Panasonic Corporation stockholders / Average
Panasonic Corporation stockholders’ equity at the beginning and the end of each fiscal year
Total assets turnover = Net Sales / Average total assets at the beginning and the end of each
fiscal year
Payout ratio = Dividends declared per share/Basic earnings per share attributable to Panasonic
Corporation stockholders
Panasonic Annual Report 2018 82
Financial Review
Panasonic has applied International Financial Reporting Standards (IFRS) on a voluntary basis since the fiscal year ended March 2017.
Financial figures for previous consolidated fiscal years are also presented in accordance with IFRS standards.
Toyota Motor Corporation on studying the feasibility of a
joint business to further advance automotive prismatic
batteries. For the housing-related business, Panasonic
made PanaHome Corporation a wholly owned subsidiary
with the aim of generating synergies among the Group’s
management resources. In the solar business, Panasonic
started selling individual cell devices to complement
existing module sales. The Company also made changes
to its module production system that included termination
of production at the Shiga plant. The Company’s initiatives
including the above resulted in increases in sales and
profit in fiscal 2018.
Net Sales
Sales increased in fiscal 2018 due mainly to growth in the
automotive- and industrial-related businesses.
Consolidated group sales increased by 9% from 7,343.7
billion yen to 7,982.2 billion yen, as domestic sales were
firm and overseas sales saw significant growth from the
automotive-related business. Contributions were made in
particular by the Automotive Business, which includes
automotive infotainment systems and car-related
equipment, and the Energy Business, which includes
rechargeable batteries. Newly consolidated Ficosa and
Zetes and favorable exchange rates also contributed to
the growth in sales.
(Billions of yen)
vs. 3/2017 %/amount
109%
137%
–
138%
158%
–
+638.5
+103.7
–0.2
+103.5
+86.6
+4.5%
Operating Results
Business Overview
During the year ended March 31, 2018 (fiscal 2018), the
global economy showed signs of recovery. The U.S.
economy performed strongly on stable consumer
spending and recovering capital investment, while the
Chinese economy also saw an increase in exports driven
by growth in foreign demand. The Japanese economy
made a moderate recovery owing to stable employment
and other factors.
Panasonic had set company targets of operating
profit and net profit attributable to Panasonic Corporation
stockholders for fiscal 2019. Toward achieving such
targets and pursuing sustainable growth, in fiscal 2018,
Panasonic promoted growth strategies aimed at sustainably
increasing sales and profits while identifying growth
areas where the Company will focus its management
resources. For the B2B business, on April 1, 2017,
Panasonic established a new Divisional Company, the
Connected Solutions Company, as a result of reorganizing
the former AVC Networks Company and developed a
more customer-oriented structure for the business that is
expected to play a key role in the growth of the
Group-wide B2B business. For the automotive-related
business, Panasonic further increased production
capacity for automotive batteries, including a new factory
in Dalian, China, which started mass production and
shipment. Panasonic also announced an agreement with
Financial Results
Net sales
Operating profit
Other income (deductions)
Profit before income taxes
Net profit attributable to
Panasonic Corporation stockholders
ROE
Exchange
rates
1 USD
1 EUR
1 RMB
3/2017
7,343.7
276.8
–1.7
275.1
149.4
9.9%
108 yen
119 yen
16.1 yen
3/2018
7,982.2
380.5
–1.9
378.6
236.0
14.4%
111 yen
130 yen
16.8 yen
83
Panasonic Annual Report 2018
Introduction
Growth Strategy
Foundation for Growth
Results for Fiscal Year
Ended March 2018
Sales (Years ended March 31)
(Trillions of yen)
9
7.3
8.0
6
3
0
Operating Profit
Operating Profit/Sales Ratio
(Years ended March 31)
Profit before Income Taxes
(Years ended March 31)
Net Profit Attributable to
Panasonic Corporation
Stockholders (Years ended March 31)
(Billions of yen)
400
380.5
(%)
6.0
(Billions of yen)
400
378.6
(Billions of yen)
240
236.0
276.8
4.8
275.1
3.8
3.0
200
0
0
200
0
160
149.4
80
0
3/’17
3/’18
3/’17
Operating Profit (left scale)
Operating Profit/Sales Ratio (right scale)
3/’18
3/’17
3/’18
3/’17
3/’18
Overview by Geographic Region
By geographic region, overall sales in Japan increased by
2% to 3,724.1 billion yen, from 3,659.1 billion yen a year
ago. Sales overseas increased by 16% to 4,258.1 billion
yen, from 3,684.6 billion yen a year ago. In real terms,
excluding the impact of exchange rates, sales increased
by 11% year-on-year. In North and South America, sales
totaled 1,368.3 billion yen, a year-on-year increase of 8%,
and a 5% increase in real terms. In Europe, sales increased
by 35% from the previous fiscal year to 821.0 billion yen,
which represents a 27% increase in real terms. In Asia and
China, sales were 2,068.8 billion yen, a 15% increase from
a year ago and a 10% increase in real terms.
Sales by Region
Japan
Americas
Europe
Asia
China
Total
3/2017
3/2018
3,659.1
1,272.2
607.7
977.2
827.5
7,343.7
3,724.1
1,368.3
821.0
1,087.1
981.7
7,982.2
(Billions of yen)
Local currency
basis
vs. 3/2017
102%
105%
127%
106%
114%
106%
Operating Profit
Cost of sales increased from 5,157.2 billion yen a year
ago to 5,643.0 billion yen. Selling, general and
administrative expenses totaled 1,938.0 billion yen, an
increase from 1,842.9 billion yen a year ago. Share of
profit of investments accounted for using the equity
method increased year-on-year to 10.1 billion yen. Other
income (expenses), net, amounted to a loss of 30.8
billion yen, compared to a loss of 75.2 billion yen the
previous fiscal year, due to declines in business
restructuring expenses and legal costs.
As a result, operating profit totaled 380.5 billion yen,
an increase from 276.8 billion yen the previous fiscal
year. Sales increases mainly in the Automotive Business
and the Industrial Business and rationalization efforts
offset the negative impacts from raw material cost hikes
and increased fixed costs due to upfront investments.
The operating profit ratio also improved to 4.8%, from
3.8% a year ago.
Profit before Income Taxes
Finance income increased from 21.8 billion yen the
previous fiscal year to 22.8 billion yen. Finance expenses
increased from 23.5 billion yen to 24.7 billion yen. As a
result, profit before income taxes was 378.6 billion yen,
compared to 275.1 billion yen the previous fiscal year.
Net Profit Attributable to Panasonic Corporation
Stockholders
Income taxes were 126.6 billion yen, compared to 102.7
billion yen a year ago. As a result, net profit attributable
to Panasonic Corporation stockholders totaled 236.0
billion yen, compared to 149.4 billion yen a year ago.
Also, net profit attributable to Panasonic Corporation
stockholders per share was 101.20 yen, against 64.33
yen the previous fiscal year.
Panasonic Annual Report 2018
84
Financial Review
Segment Information
Some businesses were reclassified into different segments on April 1, 2017, so the prior-year figures in the following analysis have been adjusted to conform
with fiscal 2018 presentation.
Fiscal 2018 Net Sales Composition Ratio
Other
7.7%
Automotive &
Industrial Systems
31.8%
Consolidated
Net Sales
¥7,982.2
billion
Appliances
29.4%
Appliances (AP)
Sales (Years ended March 31)
(Billions of yen)
3,000
2,503.4
2,588.4
2,000
1,000
0
Operating Profit
(Years ended March 31)
(Billions of yen)
150
Profit/sales ratio
(%)
5.0
3.9
4.0
98.9
104.4
75
0
2.5
0
3/’17
3/’18
3/’17
3/’18
Sales increased by 3% to 2,588.4 billion yen from a year
ago, mainly due to growth in sales of appliances and
devices in China and other areas in fiscal 2018.
Looking at the main Business Divisions (BD) of this
segment, the Air-Conditioner Company saw sales growth
driven by brisk sales of both room air-conditioners and
large air-conditioners in China and other countries.
In the Laundry Systems and Vacuum Cleaner BD,
sales increased due to strong sales of washing machines
in China and Asia.
In the TV BD, sales increased with growth in sales of
organic electroluminescent (EL) TVs, mainly in Japan and
Europe.
In the Refrigerator BD, sales increased with brisk
sales in China and Asia.
Operating profit increased by 5.5 billion yen to 104.4
billion yen from a year ago, despite a surge in raw
material prices mainly for home appliances such as
air-conditioners. The increase was mainly due to
progress made in controlling procurement prices for raw
materials and components and utilizing alternative
materials and components, coupled with gains from
increased sales.
Eco Solutions
18.4%
Connected Solutions
12.7%
Breakdown by Segment
(Billions of yen)
Net Sales
Operating Profit
Appliances
Eco Solutions
Connected Solutions
Automotive & Industrial
Systems
Other
Subtotal
Eliminations and Adjustments
Total
2,588.4
1,623.5
1,119.3
2,803.5
675.9
8,810.6
–828.4
7,982.2
104.4
72.5
105.7
91.4
10.8
384.8
–4.3
380.5
Note: Net sales composition ratio is calculated by dividing the sales of each
segment by consolidated sales before elimination and adjustments
(sales in the “Subtotal” column).
85
Panasonic Annual Report 2018
Introduction
Growth Strategy
Foundation for Growth
Results for Fiscal Year
Ended March 2018
Eco Solutions (ES)
Connected Solutions (CNS)
Sales (Years ended March 31)
(Billions of yen)
2,000
1,547.3
1,623.5
1,000
0
Operating Profit
(Years ended March 31)
(Billions of yen)
120
Profit/sales ratio
(%)
6
Sales (Years ended March 31)
(Billions of yen)
1,200
1,051.2
1,119.3
4.2
4.5
72.5
64.2
80
40
0
4
2
0
800
400
0
Operating Profit
(Years ended March 31)
(Billions of yen)
150
Profit/sales ratio
(%)
12
100
4.8
50
50.4
0
9.4
105.7
8
4
0
3/’17
3/’18
3/’17
3/’18
3/’17
3/’18
3/’17
3/’18
Sales increased by 5% to 1,623.5 billion yen from a year
ago, mainly due to growth in sales in Japan for the
electrical construction materials business and
water-related equipment, along with brisk sales overseas
for heat-exchanging ventilation units in China and the
electrical construction materials business in India and
Vietnam.
Looking at the main BDs of this segment, the Energy
Systems BD saw an increase in sales mainly due to
strong sales of wiring devices in Japan as well as in
India, Turkey and Vietnam, despite the impact of
contraction in Japan’s solar business market.
The Lighting BD saw growth in sales thanks to brisk
sales of non-housing lighting in Japan and expansion of
the China business in the overseas market.
At Panasonic Ecology Systems Co., Ltd., sales rose
as the increase in sales of ventilation systems in Japan,
which absorbed a decline in sales overseas in the
environmental engineering business, which had received
an order for major projects in the previous year.
In the Housing Systems BD, sales increased on
growth in sales of water-related equipment such as
modular system kitchens.
Operating profit increased by 8.3 billion yen to 72.5
billion yen from a year ago, mainly due to gains from
increased sales and the effect of improving cost
competitiveness, despite the impact of high procurement
prices for raw materials and components and a drop in
sales prices in the market.
Sales increased by 6% to 1,119.3 billion yen from a year
ago, mainly due to brisk sales of mounting equipment to
smartphone manufacturers and mobile notebook PCs.
Looking at the main BDs of this segment, at Panasonic
Avionics Corporation, sales declined despite a solid
performance from communications and maintenance
services, mainly reflecting lackluster growth in aircraft
in-flight entertainment systems due to lower market
demand.
In the Mobile Solutions BD, sales increased, mainly
due to growth in sales of notebook PCs and the new
consolidation of Belgian logistics solutions company
Zetes Industries S.A., which outweighed a decline in
sales of feature phones.
In the Process Automation BD, sales increased due to
growth in sales of mounting equipment and expansion of
the product line up in welding equipment for the
automotive industry.
In the Media Entertainment BD, sales increased due
to buoyant sales of high-brightness projectors and new
professional AV system products for the video
production market.
Operating profit increased by 55.3 billion yen to 105.7
billion yen from a year ago, mainly due to gains from
increased sales in the Mobile Solutions BD and the
Process Automation BD, an increase in the profit ratio for
the Media Entertainment BD caused by a shift towards
high-value added products, and improvement of other
income and expenses following a review of the reserve
for legal costs.
Panasonic Annual Report 2018 86
Financial Review
Automotive & Industrial Systems (AIS)
Other
Sales (Years ended March 31)
Operating Profit
(Years ended March 31)
Sales (Years ended March 31)
(Billions of yen)
3,000
2,803.5
(Billions of yen)
120
Profit/sales ratio
(%)
6
(Billions of yen)
1,000
Operating Profit
(Years ended March 31)
(Billions of yen)
30
Profit/sales ratio
(%)
3
2,416.6
2,000
1,000
0
93.0
91.4
3.8
3.3
80
40
0
4
2
0
500
0
674.4
675.9
20
10
0
1.6
10.8
1.2
8.0
2
1
0
3/’17
3/’18
3/’17
3/’18
3/’17
3/’18
3/’17
3/’18
Sales were 675.9 billion yen, the same level as a year
ago.
In fiscal 2018, sales at PanaHome Corporation fell
slightly affected by lower orders for new house building
and apartments despite brisk sales in Japan for interior
remodeling and condominiums.
Operating profit increased by 2.8 billion yen to 10.8
billion yen from a year ago.
Sales increased by 16% to 2,803.5 billion yen from a year
ago, mainly reflecting growth in electrification and
automation-related sales in the automotive field due to
market growth for eco-cars and expansion in demand for
advanced driver assistance system (ADAS). In the
industrial field, device sales in China were brisk.
Looking at the main businesses of this segment, in
the Automotive Business, sales increased due to higher
sales of automotive infotainment-related equipment such
as display audio systems and cockpit systems, as well as
ADAS-related products such as automotive cameras and
sonars. Consolidation of Ficosa International S.A. also
contributed to the increase.
In the Energy Business, sales increased due to growth
in sales of prismatic and cylindrical automotive batteries
in line with market growth for eco-cars, as well as to the
launch of new dry battery products in Japan and strong
sales of micro batteries overseas.
In the Industrial Business, sales increased due to brisk
sales of motors and sensors for Chinese industrial
equipment, film capacitors for eco-cars, and conductive
capacitors for data servers and semiconductor storage.
Operating profit declined by 1.6 billion yen to 91.4
billion yen from a year ago, due mainly to recording a
reversal of provision and gains from business transfer in
the previous fiscal year, despite major gains from
increased sales of automotive and industrial products
centered on the Industrial Business and automotive
batteries.
87
Panasonic Annual Report 2018
Introduction
Growth Strategy
Foundation for Growth
Results for Fiscal Year
Ended March 2018
Business Division Information for Fiscal 2018 (Sales)
1st quarter
(Apr.–June)
2nd quarter
(July–Sep.)
3rd quarter
(Oct.–Dec.)
4th quarter
(Jan.–Mar.)
(Billions of yen)
Full year (Apr.–Mar.)
Percentage
2018/2017
Air-Conditioner Business
Small & Built-in Appliance Business
AP*1
Major Appliance Business
AV Business
Commercial Refrigeration &
Food Equipment Business
Lighting BD
ES
Energy Systems BD
Housing Systems BD
Panasonic Ecology Systems Co., Ltd.
Avionics Business
Process Automation BD
CNS*2
Media Entertainment BD
Mobile Solutions BD
PSSJ
Automotive Business
AIS*3
Energy Business
Industrial Business
160.3
100.6
124.8
170.4
66.8
68.2
79.1
88.9
36.8
61.9
45.3
31.2
53.0
54.8
206.8
127.3
227.1
115.9
98.4
136.8
170.6
68.7
76.9
86.7
92.8
36.2
71.0
52.9
34.5
56.9
65.9
220.3
133.8
240.2
99.9
118.5
135.0
212.8
69.5
90.5
93.1
98.1
41.9
70.1
43.2
34.4
62.0
70.2
241.1
152.0
242.5
111.8
89.5
114.0
144.5
60.3
82.1
89.8
92.4
45.1
69.0
42.1
32.8
59.7
108.5
260.6
149.4
226.5
487.9
407.0
510.6
698.3
265.3
317.7
348.8
372.2
160.1
272.0
183.5
133.0
231.6
299.4
928.8
562.5
936.3
106%
104%
103%
107%
101%
103%
107%
101%
105%
96%
122%
106%
125%
104%
138%
114%
108%
*1 Each business in Appliances consists of the following BDs. The figures of BDs are production and sales consolidated basis.
· Air-Conditioner Business :
· Small & Built-in Appliance Business :
· Major Appliance Business :
· AV Business :
· Commercial Refrigeration & Food Equipment Business :
Air-Conditioner Company
Kitchen Appliances BD, Beauty and Living BD
Refrigerator BD, Laundry Systems and Vacuum Cleaner BD
TV BD, Imaging Network BD, Home Entertainment BD, Communication Products BD
Cold Chain BD, Hussmann Corporation
*2 Each business in Connected Solutions consists of the following BDs.
· Panasonic Business :
· Process Automation BD
· Media Entertainment BD
· Mobile Solutions BD
· PSSJ :
Panasonic Avionics Corporation, Avionics Business Unit
Panasonic System Solutions Japan Co., Ltd.
*3 Each business in Automotive & Industrial Systems consists of the following BDs.
· Automotive Business :
· Energy Business :
· Industrial Business :
Automotive Infotainment Systems BD, Automotive Electronics Systems BD, Ficosa International, S.A.
Rechargeable Battery BD, Energy Device BD
Electromechanical Control BD, Panasonic Semiconductor Solutions Co., Ltd., Device Solutions BD,
Electronic Materials BD, Panasonic Liquid Crystal Display Co., Ltd.
Panasonic Annual Report 2018 88
Financial Review
Financial Conditions and Liquidity
Liquidity and Capital Resources
The Panasonic Group has a basic policy of generating
funds needed for business activities from internal
sources. Funds generated are efficiently utilized through
intra-Group financing. Based on this, when funds are
needed for working capital or business investment,
external financing is obtained through appropriate means
based on financial strength and financial market
conditions.
Cash and cash equivalents as of March 31, 2018 were
1,089.6 billion yen, decreased from 1,270.8 billion yen at
the end of the previous fiscal year.
Interest-bearing debt increased to 1,239.4 billion yen
as of March 31, 2018 from 1,124.0 billion yen at the end
of the previous fiscal year due to the issue of short-term
bonds and other factors, despite repayments of straight
bonds.
Cash and Cash Equivalents
(Years ended March 31)
Interest-Bearing Debt
(Years ended March 31)
(Billions of yen)
1,500
1,000
1,012.7
500
0
(Billions of yen)
1,500
1,270.8
1,089.6
1,239.4
1,124.0
724.8
1,000
500
0
3/’16
3/’17
3/’18
3/’16
3/’17
3/’18
Cash Flows
The Company recognizes the importance of increasing
free cash flow by strengthening business profitability and
developing businesses over the medium-to-long term.
The Company also works simultaneously to create cash
flows through continuous reductions of working capital,
revisions of asset holdings and other measures.
89
Panasonic Annual Report 2018
Net cash provided by operating activities for fiscal
2018 was 423.2 billion yen and net cash used in investing
activities was 458.8 billion yen. Free cash flow, the total
of the two, was an outflow of 35.6 billion yen, compared
with an outflow of 34.7
billion yen a year ago.
Despite an increase in net
profit, the free cash flow
for fiscal 2018 stayed the
same level with the
previous year, due to an
increase in capital
investment and other
factors.
Free Cash Flows
(Years ended March 31)
(Billions of yen)
150
125.6
100
–50
50
0
–34.7
3/’16 3/’17
–35.6
3/’18
Capital Investment and Depreciation
The Panasonic Group makes capital investment based on
a policy of steady investments primarily in key
businesses for future growth.
Capital investment in fiscal 2018 (tangible assets only)
increased by 26% to 392.2 billion yen from 311.6 billion
yen a year ago. Major capital investments were made at
production facilities (U.S. and China) for lithium-ion
batteries for automobiles.
Depreciation (tangible assets only) increased by 1%
to 226.6 billion yen from 224.4 billion yen a year ago.
Fiscal 2018 Capital Investment by Segment
(Tangible assets only)
Other
¥40.5 billion
AIS
¥226.0 billion
¥392.2
billion
AP
¥61.5 billion
ES
¥42.1 billion
CNS
¥22.1 billion
Introduction
Growth Strategy
Foundation for Growth
Results for Fiscal Year
Ended March 2018
Assets, Liabilities and Equity
The Company’s consolidated total assets as of March 31,
2018 were 6,291.1 billion yen, an increase of 308.2 billion
yen from March 31, 2017. This increase is mainly
attributable to increases in trade receivables and
inventories from higher sales and an increase in property,
plant and equipment from capital investments.
The Company’s consolidated total liabilities were
4,408.8 billion yen, an increase of 185.8 billion yen from
March 31, 2017. This increase was due mainly to the
issuance of short-term bonds and an increase in trade
payables.
Panasonic Corporation stockholders’ equity increased
by 135.7 billion yen compared to March 31, 2017 to
1,707.6 billion yen due to recording net profit and other
factors. As a result, the ratio of Panasonic Corporation
stockholders’ equity was 27.1%, increasing from 26.3%
on March 31, 2017. With non-controlling interests added
to Panasonic Corporation stockholders’ equity, total
equity was 1,882.3 billion yen.
Total Assets
(Years ended March 31)
(Billions of yen)
8,000
5,983.0
6,291.1
5,488.0
4,000
0
Panasonic Corporation
Stockholders’ Equity
(Years ended March 31)
(Billions of yen)
1,800
1,571.9
1,444.4
1,707.6
1,200
600
0
3/’16
3/’17
3/’18
3/’16
3/’17
3/’18
Panasonic Annual Report 2018 90
Consolidated Financial Statements
Consolidated Statements of Financial Position March 31, 2018 and 2017
Please refer to the Company’s Annual Securities Report (Yukashoken Hokokusho) for more details.
(Millions of Yen)
2017
2018
Assets
Current assets:
Cash and cash equivalents
.....................................................................................................
Trade receivables
...................................................................................................................
Other financial assets
.............................................................................................................
Inventories
.............................................................................................................................
Other current assets
...............................................................................................................
Total current assets
.............................................................................................................
Non-current assets:
Investments accounted for using the equity method
...............................................................
Other financial assets
..............................................................................................................
Property, plant and equipment
...............................................................................................
Goodwill and intangible assets
...............................................................................................
Deferred tax assets
.................................................................................................................
Other non-current assets
........................................................................................................
Total non-current assets
......................................................................................................
Total assets
......................................................................................................................
Liabilities and Equity
Current liabilities:
Short-term debt, including current portion of long-term debt
..................................................
Trade payables
.......................................................................................................................
Other financial liabilities
...........................................................................................................
Income taxes payable
.............................................................................................................
Provisions
...............................................................................................................................
Other current liabilities
............................................................................................................
Total current liabilities
...........................................................................................................
Non-current liabilities:
Long-term debt
......................................................................................................................
Other financial liabilities
...........................................................................................................
Retirement benefit liabilities
.....................................................................................................
Provisions
...............................................................................................................................
Deferred tax liabilities
..............................................................................................................
Other non-current liabilities
.....................................................................................................
Total non-current liabilities
...................................................................................................
Total liabilities
...................................................................................................................
Equity:
Panasonic Corporation stockholders’ equity
Common stock
....................................................................................................................
Capital surplus
.....................................................................................................................
Retained earnings
................................................................................................................
Other components of equity
.................................................................................................
Treasury stock
.....................................................................................................................
Total Panasonic Corporation stockholders’ equity
............................................................
Non-controlling interests
.........................................................................................................
Total equity
.......................................................................................................................
Total liabilities and equity
...............................................................................................
1,270,787
847,003
143,519
806,309
137,201
3,204,819
155,987
161,986
1,323,282
665,132
407,720
64,035
2,778,142
5,982,961
177,038
955,965
329,625
66,785
317,261
865,389
2,712,063
946,966
—
467,749
17,679
62,531
16,038
1,510,963
4,223,026
258,740
636,905
1,051,445
(164,632)
(210,569)
1,571,889
188,046
1,759,935
5,982,961
1,089,585
1,038,984
203,557
988,609
165,223
3,485,958
147,959
166,466
1,374,066
738,251
325,255
53,193
2,805,190
6,291,148
375,392
1,146,476
304,977
77,380
285,954
907,756
3,097,935
864,052
18,623
349,873
10,217
56,447
11,716
1,310,928
4,408,863
258,740
527,408
1,300,336
(168,259)
(210,674)
1,707,551
174,734
1,882,285
6,291,148
91
Panasonic Annual Report 2018
Introduction
Growth Strategy
Foundation for Growth
Results for Fiscal Year
Ended March 2018
Consolidated Statements of Profit or Loss and Consolidated Statements
of Comprehensive Income Years ended March 31, 2018 and 2017
Consolidated Statements of Profit or Loss
2017
2018
(Millions of Yen)
Net sales
............................................................................................................................
Cost of sales
......................................................................................................................
Gross profit
........................................................................................................................
Selling, general and administrative expenses
......................................................................
Share of profit of investments accounted for using the equity method
................................
Other income (expenses), net
.............................................................................................
Operating profit
..................................................................................................................
Finance income
..................................................................................................................
Finance expenses
...............................................................................................................
Profit before income taxes
..................................................................................................
Income taxes
......................................................................................................................
Net profit
............................................................................................................................
7,343,707
(5,157,163)
2,186,544
(1,842,928)
8,378
(75,210)
276,784
21,832
(23,550)
275,066
(102,624)
172,442
Net profit attributable to:
Panasonic Corporation stockholders
...............................................................................
Non-controlling interests
..................................................................................................
149,360
23,082
Earnings per share attributable to Panasonic Corporation stockholders
Basic
...............................................................................................................................
Diluted
.............................................................................................................................
Yen
64.33
64.31
7,982,164
(5,642,952)
2,339,212
(1,938,010)
10,074
(30,737)
380,539
22,772
(24,721)
378,590
(126,563)
252,027
236,040
15,987
101.20
101.15
Consolidated Statements of Comprehensive Income
(Millions of Yen)
Net profit
............................................................................................................................
Other comprehensive income (loss), net of tax
Items that will not be reclassified to profit or loss
Remeasurements of defined benefit plans
....................................................................
Financial assets measured at fair value through other comprehensive income
..............
Subtotal
....................................................................................................................
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations
............................................
Net changes in fair value of cash flow hedges
...............................................................
Subtotal
....................................................................................................................
Total other comprehensive income
..................................................................................
Comprehensive income
......................................................................................................
Comprehensive income attributable to:
Panasonic Corporation stockholders
...............................................................................
Non-controlling interests
..................................................................................................
2017
172,442
73,513
4,260
77,773
(61,304)
964
(60,340)
17,433
189,875
174,892
14,983
2018
252,027
61,662
6,445
68,107
(6,852)
1,626
(5,226)
62,881
314,908
292,381
22,527
Panasonic Annual Report 2018
92
Consolidated Financial Statements
Consolidated Statement of Changes in Equity
Common
stock
Capital
surplus
Retained
earnings
Other
components
of equity
Treasury
stock
Panasonic
Corporation
stockholders’
equity
Non-
controlling
interests
Total
equity
(Millions of Yen)
Balance as of March 31, 2016
258,740
645,949
878,208
(107,922)
(230,533)
1,444,442
202,791
1,647,233
Comprehensive income:
Net profit
Other comprehensive
income (loss)—net of tax
Total comprehensive
income
Transfer to hedged non-
financial assets
Transfer from other components
of equity to retained earnings
Cash dividends
Purchase of treasury stock
Disposal of treasury stock
Transactions with non-
controlling interests and other
Cumulative effects of new
accounting standards applied
—
—
—
—
—
—
—
—
—
—
—
149,360
—
—
149,360
23,082
172,442
—
—
25,532
—
25,532
(8,099)
17,433
—
149,360
25,532
—
174,892
14,983
189,875
—
—
—
—
(6,324)
(2,720)
—
0
72,870
(72,870)
(58,025)
—
—
—
—
—
—
—
—
9,032
(9,372)
—
—
—
0
—
—
—
0
—
(58,025)
(17,648)
(75,673)
(106)
(106)
20,070
13,746
—
—
(106)
13,746
—
—
(2,720)
(12,080)
(14,800)
(340)
—
(340)
Balance as of March 31, 2017
258,740
636,905
1,051,445
(164,632)
(210,569)
1,571,889
188,046
1,759,935
Comprehensive income:
Net profit
Other comprehensive
income—net of tax
Total comprehensive
income
Transfer to hedged non-
financial assets
Transfer from other components
of equity to retained earnings
Cash dividends
Purchase of treasury stock
Disposal of treasury stock
Purchase of subsidiaries
—
—
—
—
—
—
—
—
—
—
236,040
—
—
236,040
15,987
252,027
—
—
56,341
—
56,341
6,540
62,881
—
236,040
56,341
—
292,381
22,527
314,908
—
—
—
—
(3)
—
—
(561)
71,161
(71,161)
—
—
—
—
(58,310)
—
—
—
—
—
—
—
(561)
—
—
—
(561)
—
(58,310)
(20,053)
(78,363)
(119)
(119)
14
—
11
—
—
—
(119)
11
21,126
21,126
Transactions with non-
controlling interests and other
—
(109,494)
11,754
—
(97,740)
(36,912)
(134,652)
Balance as of March 31, 2018
258,740
527,408
1,300,336
(168,259)
(210,674)
1,707,551
174,734
1,882,285
93
Panasonic Annual Report 2018
Introduction
Growth Strategy
Foundation for Growth
Results for Fiscal Year
Ended March 2018
Consolidated Statements of Cash Flows Years ended March 31, 2018 and 2017
Cash flows from operating activities:
Net profit
.........................................................................................................................
Depreciation and amortization
......................................................................................
Impairment losses on property, plant and equipment, goodwill and
Intangible assets
.......................................................................................................
Income tax expenses
...................................................................................................
(Increase) decrease in trade receivables
.......................................................................
(Increase) decrease in inventories
................................................................................
Increase (decrease) in trade payables
...........................................................................
Other—net
...................................................................................................................
Subtotal
....................................................................................................................
Interests received
...........................................................................................................
Dividend income received
............................................................................................
Interest expenses paid
.................................................................................................
Income taxes paid
........................................................................................................
Net cash provided by operating activities
.........................................................................
Cash flows from investing activities:
Purchase of property, plant and equipment
.....................................................................
Proceeds from sale of property, plant and equipment
.....................................................
Purchase of intangible assets
..........................................................................................
Collection of lease receivables
.........................................................................................
Purchase of investments accounted for using the equity method and other
financial assets
.............................................................................................................
Proceeds from sale and redemption of investments accounted for using
the equity method and other financial assets
................................................................
Proceeds from sales of subsidiaries
................................................................................
Purchase of subsidiaries, net of cash acquired
................................................................
Other—net
......................................................................................................................
Net cash used in investing activities
.................................................................................
Cash flows from financing activities:
Increase (decrease) in short-term debt
............................................................................
Proceeds from long-term debt
........................................................................................
Repayments of long-term debt
........................................................................................
Dividends paid to Panasonic Corporation stockholders
...................................................
Dividends paid to non-controlling interests
......................................................................
Purchase of treasury stock
............................................................................................
Proceeds from sale of treasury stock
..............................................................................
Transactions with non-controlling interests
......................................................................
Other—net
......................................................................................................................
Net cash provided by (used in) financing activities
...........................................................
Effect of exchange rate changes on cash and cash equivalents
.........................................
Net increase (decrease) in cash and cash equivalents
........................................................
Cash and cash equivalents at the beginning of the year
.....................................................
Cash and cash equivalents at the end of the year
..............................................................
2017
2018
(Millions of Yen)
172,442
270,767
45,868
102,624
(7,983)
(36,612)
64,044
(116,107)
495,043
16,956
1,857
(23,816)
(104,630)
385,410
(278,594)
51,155
(63,220)
—
252,027
287,754
26,772
126,563
(156,577)
(164,137)
143,023
(16,773)
498,652
20,522
2,250
(21,800)
(76,442)
423,182
(394,485)
29,046
(81,118)
19,281
(29,119)
(23,938)
31,163
11,622
(142,844)
(319)
(420,156)
6,261
400,549
(50,900)
(58,025)
(17,648)
(106)
9
(2,946)
17,404
294,598
(1,731)
258,121
1,012,666
1,270,787
14,677
183
(15,646)
(6,828)
(458,828)
239,990
3,521
(163,429)
(58,310)
(20,053)
(119)
11
(129,229)
(1,145)
(128,763)
(16,793)
(181,202)
1,270,787
1,089,585
Panasonic Annual Report 2018 94
Corporate Data (As of March 31, 2018)
Panasonic Corporation and Subsidiaries
Years ended March 31
Corporate Data
Company Name: Panasonic Corporation
(TSE Securities Code: 6752)
Founded: March 1918 (Incorporated in December 1935)
Stated Capital: 258,740 million yen
Consolidated Companies (including parent company):
592 companies
Head Office Location:
1006, Oaza Kadoma, Kadoma-shi, Osaka
571-8501, Japan
Associated Companies under the Equity Method:
88 companies
Number of Employees: 274,143 persons
Share Data
Number of Shares Issued: 2,453,053,497 shares
(Including 120,718,303 shares held by Panasonic)
Number of Shareholders: 485,053
TSE Securities Code: 6752
Unit of Stock: 100
Stock Exchange Listings: Tokyo, Nagoya
Transfer Agent for Common Stock
Sumitomo Mitsui Trust Bank, Limited
5-33, Kitahama, 4-chome, Chuo-ku, Osaka-shi,
Osaka 540-8639, Japan
Phone: +81-3-3323-7111
Depositary for American Depositary Receipts (ADRs)
Stock Exchange: U.S. Over-the-Counter (OTC) Market
ADR Ratio: 1 ADR = 1 Share
Symbol: PCRFY
Stock Transfer Handling Office
J.P. Morgan Chase Bank, N.A.
P.O. Box 64504
St. Paul, MN 55164-0504, U.S.A.
Tel: +1-800-990-1135 (U.S.: toll free)
+1-651-453-2128 (International)
Number of Shares
Issued (in thousands of shares)
3/2009
3/2010
3/2011
3/2012
3/2013
3/2014
3/2015
3/2016
3/2017
3/2018
2,453,053
2,453,053
2,453,053
2,453,053
2,453,053
2,453,053
2,453,053
2,453,053
2,453,053
2,453,053
Number of Shareholders
277,710
316,182
364,618
557,102
577,756
499,728
469,295
514,129
486,489
485,053
Distribution by Type of Shareholders (%)
Japanese Financial
Institutions, etc.
Overseas Investors, etc.
Other Corporations
Individuals and Others
Treasury Stock
34.1
22.5
7.1
20.7
15.6
30.8
25.3
7.1
21.2
15.6
30.9
22.7
7.1
23.7
15.6
34.2
21.9
8.4
29.7
5.8
28.3
25.3
8.3
32.3
5.8
27.2
33.2
7.4
26.4
5.8
30.1
32.9
7.1
24.1
5.8
30.6
31.2
6.9
25.9
5.4
30.8
32.6
7.0
24.7
4.9
31.9
33.4
6.8
23.0
4.9
Total
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
Major Shareholders
Name
Japan Trustee Services Bank, Ltd. (trust account)
The Master Trust Bank of Japan, Ltd. (trust account)
NIPPON LIFE INSURANCE COMPANY
MOXLEY AND CO LLC
Japan Trustee Services Bank, Ltd. (trust account 5)
Panasonic Corporation Employee Shareholding Association
STATE STREET BANK WEST CLIENT - TREATY 505234
SUMITOMO LIFE INSURANCE COMPANY
Japan Trustee Services Bank, Ltd. (trust account 7)
Japan Trustee Services Bank, Ltd. (trust account 1)
Share ownership
(in thousands of shares)
Percentage of
total issued shares (%)
167,229
141,151
69,056
44,864
43,657
41,159
40,827
37,465
32,952
32,451
7.17
6.05
2.96
1.92
1.87
1.76
1.75
1.60
1.41
1.39
Notes: 1. The figures in share ownership are rounded down to the nearest thousands of shares.
2. Shareholding ratio is calculated by deducting the Company’s treasury stock (120,718,303) and rounded down to two decimal places.
3. The English names of foreign shareholders above are based on the General Shareholders Notification notified by Japan Securities Depository Center, Inc.
95
Panasonic Annual Report 2018
Introduction
Growth Strategy
Foundation for Growth
Results for Fiscal Year
Ended March 2018
Company Stock Price and Trading Volume (Years ended March 31) Tokyo Stock Exchange monthly basis
Stock Price (Yen)
3,000
2,000
1,000
0
3/2009
3/2010
3/2011
3/2012
3/2013
3/2014
3/2015
3/2016
3/2017
3/2018
Trading Volume (Millions of shares)
1,500
1,000
500
0
3/2009
3/2010
3/2011
3/2012
3/2013
3/2014
3/2015
3/2016
3/2017
3/2018
High (Yen)
Low (Yen)
Period-End (Yen)
3/2009
2,515
1,000
1,069
3/2010
1,585
1,062
1,430
3/2011
1,480
826
1,058
3/2012
1,070
582
761
3/2013
781
376
654
3/2014
1,408
594
1,173
3/2015
1,614.0
1,030.0
1,577.0
3/2016
1,853.5
799.0
1,033.5
3/2017
1,309.5
831.4
1,258.0
3/2018
1,800.0
1,207.5
1,521.0
Corporate Bonds
Unsecured Straight Bonds in Japan
Series
Years
8th
12th
13th
14th
15th
16th
17th
4th*
10
5
7
10
5
7
10
10
Coupon rate
(per annum)
Aggregate principal
amount of issue
2.050%
0.387%
0.568%
0.934%
0.190%
0.300%
0.470%
1.593%
100 billion yen
220 billion yen
80 billion yen
100 billion yen
200 billion yen
70 billion yen
130 billion yen
30 billion yen
Maturity date
March 20, 2019
March 19, 2020
March 18, 2022
March 19, 2025
Sept. 17, 2021
Sept. 20, 2023
Sept. 18, 2026
June 20, 2019
* Originally issued by former Panasonic Electric Works. Panasonic succeeded corporate bonds of former Panasonic Electric Works on January 1, 2012.
Europe
Panasonic Europe Ltd.
Panasonic House, Willoughby Road,
Bracknell, Berkshire, RG12 8FP, U.K.
Phone: +44-1344-853135
Investor Relations Offices
Japan
Osaka
Panasonic Corporation
Corporate Finance & Investor Relations Department,
Investor Relations
1006, Oaza Kadoma, Kadoma-shi, Osaka
571-8501, Japan
Phone: +81-6-6908-1121
Tokyo
Panasonic Corporation
Corporate Finance & Investor Relations Department,
Investor Relations
TOKYO MIDTOWN HIBIYA 14F,
1-1-2 Yuraku-cyo, Chiyoda-ku, Tokyo
100-0006, Japan
Phone: +81-3-3437-1121
IR and Sustainability Websites
IR
Please refer to Panasonic’s IR site for information on the Company including financial results and presentation materials.
https://www.panasonic.com/global/corporate/ir.html
Sustainability
Please refer to the “Sustainability” section of the Company’s website for more information regarding environmental and social initiatives.
https://www.panasonic.com/global/corporate/sustainability.html
Panasonic Annual Report 2018 96
https://www.panasonic.com/global