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Japanese consumer electronics maker Matsushita Electric Industrial Co. reduced its earnings forecast for the year ended March 31, 2003, as it plans to book larger-than-expected appraisal losses on its stockholdings and take a charge to prepare for the implementation of a new local corporate enterprise tax. The Japanese company expects a group net loss of 23.5 billion yen (U.S. $195.8 million), a substantial drop from its previous forecast for a 25 billion yen profit. Matsushita Electric Industrial follows a number of others including Sharp Corp. and Mitsubishi Electric Corp. in announcing reduced earnings forecasts as the value of their stockholdings has fallen amid the sharp stock market slide. This will be the first time Matsushita Electric has posted consolidated net losses 2 years running. However, the company kept both its group operating profit and sales outlook unchanged at 120 billion yen and 7.1 trillion yen, respectively. It cited restructuring measures to cut inventories and the introduction of a range of audiovisual equipment such as DVD recorders and plasma televisions, which have been popular among consumers. The firm's appraisal losses, mostly on bank shares, ballooned to 37 billion yen in the year. The company holds shares in banks including Sumitomo Mitsui Financial Group Inc. The company is also booking a 27 billion yen charge to prepare itself for the implementation of a new local corporate enterprise tax, designed to apply non-earnings standards, such as the amount of a company's capital, in taxation. Matsushita will take this charge to dispose of the portion of its currently registered deferred tax assets that must be cut to conform with the new, lower tax rate. (Dow Jones) This downward earnings revision won't affect the company's core business operations or its cash flow, Matsushita said. It will maintain its plan to pay an annual dividend of 12.5 yen a share, up 2.5 yen from a year ago. Back
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