Panasonic to Slash 10000 Jobs, Braces for $900M Restructuring Hit

In an attempt to restructure the company, Panasonic Holdings announced on May 9 that it will layoff 10,000 employees and anticipate spending 130 billion yen ($896.06 million) this fiscal year. According to a statement, the electronics company plans to lay off employees mostly during the current fiscal year, with half of those layoffs occurring in Japan and the other half abroad.

The reductions will be made by combining sales and indirect operations, closing locations, and letting go of Japanese workers who are retiring early. Panasonic's website states that it employs about 228,000 people worldwide.

 Through restructuring, the company hopes to increase group profitability and reach a 10% return on equity, which is a measure of profitability, by the fiscal year that ends in March 2029. In the fiscal year ending March 31, 2027, Panasonic also stated that it will aim for a group adjusted operating profit of at least 600 billion yen, in part because of a reorganisation of its consumer electronics division, the closure of businesses that are losing money, and the simplification of its IT expenditures.

In an update of its makeover released in February, the business stated that it will examine the operational efficiency of its group companies, specifically in the back-office and sales divisions.

Restructuring and Future Plans

Its lifestyle business, which comprises heating and ventilation systems and home electronics, would account for nearly half of the restructuring costs. The remaining 40% will be allocated to "other" industries, which includes its holding company.

It didn't anticipate incurring any restructuring expenses in its energy division. Due to anticipated increases in sales of batteries and energy storage systems, Panasonic also projected a 39% increase in operating profit at its energy division that produces batteries for electric vehicles, bringing it up to 167 billion yen for the fiscal year ending March 31, 2026.

In the year ending in March, the energy company, which produces batteries for Tesla (TSLA.O), opens a new tab, and other vehicles made 120.2 billion yen, falling short of its own projection of 124 billion yen. Panasonic predicted that its overall operating profit for this fiscal year would drop by 13% to 370 billion yen.

Reason for the Layoffs

In an April interview with a Japanese publication, Yuki Kusumi, the CEO of Panasonic Holdings, stated that layoffs are required to outperform competitors. According to a report, the action is a component of the company's management reform, which aims to address the significant changes in the global business climate.

 Panasonic intends to reduce its personnel, streamline and combine indirect tasks, and withdraw or close down businesses that are losing money.

In its fiscal 2024 earnings report, which was made public that same day, Panasonic stated that its net profit fell 17.5% year over year to 366.2 billion yen (roughly 2.53 billion US dollars), while its revenue was 8.46 trillion yen (roughly 54 billion US dollars), down 0.5% from the previous fiscal year.