Eco Solutions Company Midterm Plan - Panasonic Solutions Company Midterm Plan Panasonic IR Day 2013...

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Eco Solutions CompanyMidterm Plan

Panasonic IR Day 2013

May 30, 2013

Panasonic CorporationEco Solutions Company

President Shusaku Nagae

Notes: 1. This is an English translation from the original presentation in Japanese.

2. In this presentation, “fiscal 2014” or “FY2014” refers to the year ending March 31, 2014.

2

１．Company Profile

２．Midterm Plan

３．Business Policy

４．Summary

Contents


3


２．Midterm Plan


４．Summary

Contents

4

ＥｃｏＳｏｌｕｔｉｏｎｓＣｏｍｐａｎｙ

Our Mission

Providing a residential/non-residential environmentwhere people around the world can live comfortably while reducing the environmental impact.

We will make untiring efforts to offer solutions for creating a comfortable environment while reducing environmental burden, including “home,”“office building,” “factory,” and “community” by using our accumulated technology and cutting-edge energy management technology.

We will devote ourselves to the progress and development of society and the well-being of people through our one and only unique business activities including service solution business in terms of business model innovation and value chains, thereby enhancing the quality of life throughout the world.


5

The Company is composed of four business (manufacturing) divisions, their twelve business units,and two marketing divisions for Japan and Overseas, etc.

Lighting Business Division

Energy Systems Business Division

Panasonic Ecology Systems Co., Ltd.

Housing Systems Business Division

Marketing Division

Global Marketing Division Exterior Products & Systems BU

Power Components BU

System Components BU

Solar BU

Interior Lighting BU

Professional Lighting BU

Lighting & Devices BU

IAQ BU

Elderly Care BU

Interior Furnishing & Systems BU

Engineering Division

Manufacturing Innovation Division

（Back Office Function under Head Office）

OrganizationPre

side

nt

Kitchen Furniture, Bathroomand Sanitary Fittings BU

Environmental System& Engineering BU

Note: BU refers to Business Unit.

6

Lighting Energy Systems

Housing Systems Panasonic Ecology Systems Co., Ltd.

(Sales & number of full-time employees are based on FY2013 consolidated basis.)

Our Business (1)

Sales: 356.0 billion yen

Number of employees：Approx. 16,300

Principal Business

・ Power components

・ System components

・ PV power generation systems



Principal Business

・ Kitchen furniture, bathroom

and sanitary fittings

・ Interior furnishing and systems

・ Exterior products and systems



Principal Business

・ Indoor air quality appliances

・ Ventilation equipment

・ Air, water and soil purification systems



Principal Business

・ Residential lighting

・ Institutional and commercial lighting

・ Lighting sources and devices


7

FY2013Sales by segment

FY2013Sales by region

North America

2%

Europe 2%

Asia/Oceania

2%

China/North East Asia

3%

India/Middle East 2%

Japan 89%

Our Business (2)

1,673.2billion yen

18%

16%

22%

8%22%

14%

LightingOthers

OtherDomainCompanies

PanasonicEcology Systems Co., Ltd.

Housing Systems

EnergySystems

1,673.2billion yen

8

Sell other domain companies’ products through strong channelwith our marketing division to drive group-wide growth

Appliances Company

Energy-saving equipment

AVC NetworksCompany

Video intercom

Security camera

Eco Solutions CompanyMarketing Division

Lighting Energy systems

Housing systems

Customers

Features of Business

Proposals & Sales

Industrial air conditioner

Freezingand refrigerationshowcase Panasonic

Ecology Systems Co., Ltd.


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Contents


２．Midterm Plan


４．Summary

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数値は経理確認FY2016 Financial Targets (billion yen)

+15%+ 3%

+ 6%

+30%

Sales

+6%

Operating Profit

62.886.0

3.8%4.9%

（5.6%）（4.3%）

Sales by Major Segment

Lighting

Energy Systems

Housing Systems

Panasonic Ecology Systems Co., Ltd.

FY2013 FY2016Rate of Increase(FY13 vs. FY16)

300.3356.0

364.4

130.0

345.0367.0

385.0169.0

FY2013 FY2016 FY2013 FY2016

（）: Operating profit margin except sales of products purchased from other domain companies

Operating profitmargin

1,673.21,770.0

FCF ≧120.0 billion yen (Accumulating total in FY2014-2016)


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Expand New Business Overcoming Sales Decrease Expand New Business Overcoming Sales Decrease due to Hike in Consumption Tax due to Hike in Consumption Tax

Establish Profitable Establish Profitable Business StructureBusiness Structure

◇ Establish environmental energy-related business base

Enjoy Special Demand before Consumption Tax HikeEnjoy Special Demand before Consumption Tax Hikeand Prepare for Growth in New Businessand Prepare for Growth in New Business

◇ Make a profit in strong business amid tailwinds of special demand ◇ Set up business models and implementation systems for new growth

Build up High-profitBusiness Structure

Expand New Business

Preparefor Growthin New Business

FY2019

FY2014

FY2016

FY2015

Midterm Management Vision

① Strengthen core businessin growing areas & markets

② Accelerate launching new business in environmentalenergy field toward FY2019

Basic Policy of Midterm Plan

12

Basic Strategy Ⅰ Strengthen Core Business

[Japan] Further Strengthen Core BusinessⅠ－１Ⅰ－１

[Overseas] Expand Business in “AC&I”Ⅰー２Ⅰー２

Make a Solid Profit from Make a Solid Profit from Core BusinessCore Businessand a Shift to and a Shift to Growing Business FieldsFields

Enhance the Added Valuein Energy Management System BusinessⅡ－１Ⅱ－１

Ⅱ－２Ⅱ－２

CoreBusiness

GrowingBusiness

① Strengthen core business in growing areas & markets(Make more profit in Japan and expand overseas business)

② Accelerate launching new business in environmental energy field(Shift to high value-added business)

Outline of Midterm Business Strategy

Ⅱ－３Ⅱ－３

(China & India and Other Asian Countries)

Basic Strategy Ⅱ New Growth in Engineering Business

Strengthen the Shift to Engineering & Service Businesses

Strengthen Remodeling Business (Consulting Services on Living Space & After-sales Services)


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数値は経理確認

Ⅰ－1 Ⅰ－1

(billion yen)Top-line Growth in Core Business

Ⅰ－2 Ⅰ－2

Basic Strategy Ⅰ Strengthen Core Business

[Japan] Further Strengthen Core Business [Overseas] Expand Business in “AC&I”(China & India and Other Asian Countries)

FY2013 FY2016

+3%

1,482.5

1,525.0

FY2013 FY2016

+40%

110.0

155.0

Core Business

14

Increase Profits: Increase Profits: ““Flagship Products to Be the Best by Far & IntegratedFlagship Products to Be the Best by Far & Integrated””×× ““Sales Activities that Satisfy Distributors & CustomersSales Activities that Satisfy Distributors & Customers””

Flagship Products to Be the Best by Far & Integrated Sales Activities that Satisfy Distributors & Customers

[Japan] Further Strengthen Core Business Ⅰ－１Ⅰ－１ Core Business

Creation of housing space network /Realization Creation of housing space network /Realization of ecoof eco--conscious & smart business solutionsconscious & smart business solutions

Making full use of distribution channels Making full use of distribution channels and resources of contact point with customers and resources of contact point with customers

Water-relatedProduct

and BuildingMaterials

PowerEquipment

LED Lighting

ＩＡＱ（Indoor Air Quality）

ＡＰＡＰＡＰ

ＡＶＣＡＶＣＡＶＣＡＩＳＡＩＳＡＩＳ

ESES

EngineeringServicesPV Power

Generation Systemand Power Inverter

Marketing Div.for Housing Products

Marketing Div.for Electrical Construction Materials

Customers

Strengthen Sales Promoters

Develop New Routes

Strengthen Contact Points for the Remodeling Business

Strengthen Strategic Stores

Capture Contractors under Direct Control of Our Clients

Strengthen Personnel for Upgrading IT Systems

StrengthenFront-lineSales-forceFunctions

Strengthen Engineering Centersand TechnicalCenters


15

India

China

ThailandVietnam

Malaysia

Indonesia

Taiwan

Philippines

Accelerate the Growth of Strong Business in growing Accelerate the Growth of Strong Business in growing ““AC&IAC&I””（（China & IndiaChina & India and Other Asian Countries and Other Asian Countries ））

[Overseas] Expand Business in “AC&I”Ⅰ－2Ⅰ－2 Core Business

“Concentration of Resources”① Significantly increase sales in

electrical construction materials business

② Development of non-residential business

“Expand into the MiddleEastern Markets”with Eyes on African and CIS Markets

① Put electrical construction materialsbusiness on track

② Further increase sales and earnings in the interior business

“Localization”

① Increase the share of electrical construction materials in core countries.

② Expand business of PanasonicEcology Systems Co., Ltd.

“Oligopolization”

Other Asian Countries

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数値は経理確認Prepare for Next Generationin Growing Businesses

Ⅱ－1 Ⅱ－1

FY2013 FY2016

+25%

(Except PV modules/Service businesses)

Ⅱ－2 Ⅱ－2 Ⅱ－3 Ⅱ－3

4050

FY2013 FY2016

+50%125

190

FY2013 FY2016

+8%

250270

FY2013 FY2016

+120%

17

37

［Japan］［Overseas ］

Basic Strategy Ⅱ New Growth in Engineering Business

(billion yen)

Enhance the Added Valuein Energy Management System Business

Strengthen the Shift to Engineering & Service Businesses

Strengthen Remodeling Business

Growing Business

SalesSales

SalesSales


17

Services

Remote Monitoring ESCO* Demand

Response Ancillary

PV Power Generation

System

Power InverterElectric VehicleCharging Outlet

“AiSEG” Monitor

Maintenance/Construction

High

Strengthen Engineering Function & Develop and Strengthen Service Business

Energy-saving Equipment

(Non-residential)

Ventilation System

Internally Installed/Exterior Thermal InsulationMaterials

Enhance the Added Value in Energy Management System Business Ⅱ－１Ⅱ－１ Growing Business

Develop Develop ““EcoEco--conscious & Smart Solutionsconscious & Smart Solutions””-- Abundant Energy Creation/Storage/Saving Management System Abundant Energy Creation/Storage/Saving Management System

Equipment and Structures + Engineering Equipment and Structures + Engineering --

Added v

alu

e

Energy Creation and Energy Storage Linkage System

Energy-saving Home Appliances (Residential)

Individual ProductEquipment/Structure

Energy Management

System

TM

* Energy Service Company

Ｐａｓｓｉｖｅ＆ＡｃｔｉｖｅEnergy Management System

18

・・・

Power Generation Plant C

Strengthen Engineering & Service Businesses (1)Ⅱ－２Ⅱ－２

Shift to Providing Added values including Design, Construction, Maintenance, Monitoring and a Range of Services from Selling-Individual-Product-oriented Business Model

Japan

Initial-stage Business

Proposing a Plan/Designing/Construction Component

Replacement/Repair

Energy Visualization

Maintenance

Winning CustomersWinning Customers’’ TrustTrust Create Lifetime Create Lifetime Customers Customers

Ongoing After-sales Support Business

EPC*1 O&M*2

Offering SystemsOffering Systems

Cloud Serversfor Remote Monitoring

State

Monitoring

(Repair)

Introduction of BEMS

Visualization

Power Saving

Data Analysis

Growing Business

Maintenance & MonitoringServices

Remote Monitoring for Solar Power Generation

Power Generation Plant B

Power Generation Plant A

Proposal of Products

Analysis

BEMS*3 Aggregator

*1 Engineering, Procurement and Construction *2 Operations and Maintenance

Selling Other Products for Energy Efficient Renovation

*3 Building Energy Management System


19

Establish Business Models that Best Suit Market Environment of Each Region

North America

Establish New Business Models

Develop engineering business at “Firepro”

＜PV-related Solution Business＞

- Housing Interior Solution Business- Energy-saving Solution Business

for Non-residential Building

China

- Energy-saving Solution Business for Factory - Drug Solution Recycling Business

Other Asian Countries

India

Ⅱ－２Ⅱ－２ Growing BusinessStrengthen Engineering & Service Businesses (2)

20

Remodeling

Full-scale Renovation

Refreshment

Repair

6 Trillion Yen Market

Strengthen Contact with Customers Expand Provided Values

Strengthen Contact to All Markets with Internal and External Collaboration Provide Spatial Values

Lighting

Air Quality

Visual

AudioSecurity

Storage

Energy

Expand Product Line-upExclusively for Remodeling

Strengthen Delivery Capability

“Resmplus”

“AGE-FREE”

“Reborn 21”

“Refine Shop”

Strengthen Remodeling Business (Consulting Services on Living Space & After-sales Services)

Ⅱ－３Ⅱ－３ Growing Business

Capture Remodeling Business by Strengthening Contact Capture Remodeling Business by Strengthening Contact with Customers and Expanding Provided Values with Customers and Expanding Provided Values

-- Establish Lifetime Relationship with Customers in All Markets Establish Lifetime Relationship with Customers in All Markets --

“Wagaya Minaoshitai”(My home reexamination unit)

(Collaboration with “Century 21”)

(Elderly Care)

(Consultation Service for Remodeling )

Aft

er-s

ale

s Ser

vic

es

usi

ng H

isto

rica

l M

anagem

ent

(Example for After-sales Support Service)


21


２．Midterm Plan


４．Summary

Contents

22

■ Sales will increase thanks to special demand before consumption tax hike in Japan.

■ Operating profit will decrease due to the impact ofyen depreciation and drop in solar panel price, etc.

■ FCF in FY2013 includes the sales of “Shiodome Building.”

FY2014 Financial Targets

Sales Operating Profit FCF

FY2013 FY2014 FY2013 FY2014 FY2013 FY2014

1,673.2 1,710.0

+2%

62.858.0

79.3

28.03.8%

（4.3%）

3.4%

（4.0%）

(billion yen)

（）: Operating profit margin except sales of products purchased from other domain companies


23

Sales (billion yen)

FY2013 FY2014

・Enhance LED Lighting Business for Remodeling andRenovation of Non-residential Buildings in Japan

・Strengthen Residential LED Lighting Businessincluding LED Lamps in “AC&I”

・Improve Cost Competitiveness by Procurement andProduction Rationalization

・Develop New Applications and Systems in the fields of Non-building and Non-lighting Applications

Distinctive Technologies Breaking Free from Commoditization of LED Lighting Products Sensation-of-Room-Brightness

Index “Feu”

Ambient Lighting Index “V”

FY2014 Major Initiatives Lighting Business Division

Core Business

Growing Business

LED Security Light Favorable Color Vivid Color

+5%

300.3315.0

24

Sales (billion yen)

FY2013 FY2014

・ China: Expand Sales of Wiring Products in the High-volume zone

・ India: Strengthen Sales Forces to Expand the Business in Provincial Cities

・ Other Asia Countries: Local Production for Local Consumption of Products Tailored to Local Needs towardFurther Oligopolization of ElectricalConstruction Market in Each Country

・ Standardize “SMARTHEMS” as Home Energy Management System

・ Providing Integrated System between PV Power Generation System,Power Inverter and Storage Battery System

Development of Home Energy Management Business

Grid Compatibility

V2H

Energy Creation/Storage Controls

Energy-SavingControls

The conceptual drawing is for illustrative purposes only.

Core Business

Growing Business

Core Business

Growing BusinessTM

FY2014 Major Initiatives Energy Systems Business Division

-3%

356.0345.0


25

Sales (billion yen)

FY2013 FY2014

364.4385.0

・ Expand Interior Construction Business andEnhance Development of Franchise Stores in China

・ Strengthen Product Development for High-qualitySpace and Home Remodeling as well as Sales Force including Customer Contact/Proposal/Support Capabilities

・ Expand Housing Product Line-up, and Develop Advanced“Passive” Housing Materials by Using Simulation Technology

High-quality Space (“Archi – Spec” Series)

Bathroom

Floor/Wall/Ceiling

“Passive” Interior Materials(Internally Installed Thermal

Insulation Materials)

Home-remodeling Products (“Refoms”)

System Kitchen

Interior Materialswith Lighting Equipment

BathroomSystem Kitchen

Core Business

Growing Business

FY2014 Major Initiatives Housing Systems Business Division

+6%

26

Sales (billion yen)

FY2013 FY2014

130.0140.0

・ Ventilation Fan: Firmly Maintain the Global No.1 Market PositionCentered on Japan, China, Other Asian Countries and North America

・ Air Purifier: Expand B2B Business in Japan andLaunch the High-volume Zone Productsfor China in India and Other Asian Countries

・ Ceiling Fan: Launch High Added Value Products andStrengthen Cost Competitivenessto Expand the Business in Asia

Air Purifier

Japan India &OtherAsian Countries

Environmental Engineering BusinessVentilation Fan

North America

“air-e”

Jet Fan Ventilation

・ Expand Ongoing Businesses including Drug Solution Recycling Business and Maintenance Business

・ Reinforce Efforts to Develop New Business of Cleaning Filter DieselExhaust Gas (Catalyzed Diesel Particulate Filter)

Core Business

Growing Business

Launch New Typeof Ventilation Fan

Expand B2B Business Launch the High-volume Zone Products in China to India and Other Asian Countries

JapanExpand Maintenance Business

Air-conditioning Facility

FY2014 Major Initiatives Panasonic Ecology Systems Co., Ltd.

“nanoeTM” Generatorembedded in ceiling(without ventilationfunction)

Air Purifier

8%


27


２．Midterm Plan


４．Summary

Contents

28

Toward Achievement of Our Midterm Plan

■ Reinforce Management Base by Further Strengthening Core Businessin Japan and Expanding Business in “AC&I”

■ Enhance Energy Management System Business by Expanding “Passive”Energy Management Product Line-up and Upgrading “Active” Energy Management Products as well as Strengthening Service Business

■ New Growth in Engineering/ Service Businesses■ Strengthen Remodeling Business

Provide Products and Services Centered on Energy Solutions

Globally to Realize Sustainable Profit Growth

that is Appropriate for the Excellent Company

Mid to long-term Goal

Summary


Disclaimer Regarding Forward-Looking StatementsThis presentation includes forward-looking statements (within the meaning of Section 21E of the U.S. Securities Exchange

Act of 1934) about Panasonic and its Group companies (the Panasonic Group). To the extent that statements in this presentation 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 presentation. 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. .

The risks, uncertainties and other factors referred to above include, but are not limited to, economic conditions, particularly consumer spending and corporate capital expenditures in the United States, Europe, Japan, China, and other Asian countries; volatility in demand for electronic equipment and components from business and industrial customers, as well as consumers in many product and geographical markets; currency rate fluctuations, notably between the yen, the U.S. dollar, the euro, the Chinese yuan, Asian currencies and other currencies in which the Panasonic Group operates businesses, or in which assets and liabilities of the Panasonic Group are denominated; the possibility of the Panasonic Group incurring additional costs of raising funds, because of changes in the fund raising environment; the ability of the Panasonic Group to respond to rapid technological changes and changing consumer preferences with timely and cost-effective introductions of new products in markets that are highly competitive in terms of both price and technology; the possibility of not achieving expected results on the alliances or mergers and acquisitions including the business reorganization after the acquisition of all shares of Panasonic Electric Works Co., Ltd. and SANYO Electric Co., Ltd.; the ability of the Panasonic Group to achieve its business objectives through joint ventures and other collaborative agreements with other companies; the ability of the Panasonic Group to maintain competitive strength in many product and geographical areas; the possibility of incurring expenses resulting from any defects inproducts or services of the Panasonic Group; the possibility that the Panasonic Group may face intellectual property infringement claims by third parties; current and potential, direct and indirect restrictions imposed by other countries over trade, manufacturing, labor and operations; fluctuations in market prices of securities and other assets in which the Panasonic Group has holdings or changes in valuation of long-lived assets, including property, plant and equipment and goodwill, deferred tax assets and uncertain tax positions; future changes or revisions to accounting policies or accounting rules; as well as natural disasters including earthquakes, prevalence of infectious diseases throughout the world, disruption of supply chain and other events that may negatively impact business activities of the Panasonic Group. The factors listed above are not all-inclusive and further information is contained in the most recent English version of Panasonic’s securities reports under the FIEA and any other documents which are disclosed on its website.

In order to be consistent with generally accepted financial reporting practices in Japan, operating profit (loss) is presented in accordance with generally accepted accounting principles in Japan. The company believes that this is useful to investors in comparing the company's financial results with those of other Japanese companies. Under United States generally accepted accounting principles, expenses associated with the implementation of early retirement programs at certain domestic and overseas companies, and impairment losses on long-lived assets are usually included as part of operating profit (loss) in the statement of income.

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