Panasonic Expects Record Profit After US Tax Credit & Robust Battery Demand
Panasonic (PCRFY) from Japan recently revealed that it is expecting record net profit due to the US tax credit and auto battery sales.
Now that the semiconductor shortage is also over, it makes sense for companies like Panasonic to make such forecasts.
Panasonic - A Major Supplier For Tesla
Panasonic is a major supplier of batteries for Tesla (TSLA), which is the leader in electric vehicles manufacturing. In addition, Tesla is also expanding its business of renewable energy which is also bullish news for Panasonic.
If we look at the potential downsides for Panasonic, it would be the high inflation that can dampen consumer spending.
Panasonic is forecasting a growth of 32% in its net profit and expects to earn around $2.59 billion (350 billion yen). The positive development for Panasonic is the US tax credit aimed at EV battery operations. Overall, the outlook for the net profit is 23% higher than the earlier 284.1 billion yen net profit.
Similarly, Panasonic is expecting 430 billion yen worth of operating profit by the end of March 2024. Just a year ago, the company's operating profit was 288.6 billion yen which highlights the importance of this bullish forecast.
During the 4th quarter that ended on March 31, the operating profit of Panasonic was 54.4 billion yen. Just a year ago, the same operating profit was 83.4 billion!
Overall, things are looking good for Panasonic as there will be a lot of demand for batteries. And when we consider the global push to switch towards renewable energy, we can't ignore the fact that batteries will play a central role in that!
Based on that, it isn't wrong to think that companies like Panasonic will benefit immensely from it. In fact, Panasonic already has big-name clients, such as Tesla, who are relying on it for batteries.
This news has improved the fundamental situation of Tesla and will likely also reflect likewise on the company's stock as well.