TOKYO, July 31 (Reuters) - Japan’s Panasonic Corp on Tuesday reported a 19 percent increase in first-quarter profit, beating estimates, as strong demand for factory automation equipment offset costs incurred ramping up automotive battery plants.
The electronics conglomerate posted operating profit of 99.96 billion yen ($897.8 million) for April-June, from 83.93 billion yen a year prior. That compared with the 98.53 billion yen average of seven analyst estimates compiled by Thomson Reuters I/B/E/S.
Panasonic maintained its profit forecast for the year through March at 425 billion yen, versus the 433.9 billion yen average of 21 analyst estimates.
Seeing automotive batteries as central to growth, Panasonic ramped up production this year both at a new plant in China and at Tesla Inc’s so-called Gigafactory which it jointly runs in the U.S. state of Nevada.
Panasonic’s share price has nevertheless been on a downward trend this year as investors worry the firm’s $1.6 billion Gigafactory bet has made it susceptible to the strategy of a U.S. electric vehicle maker struggling with mass production.
Tesla cleared a long-elusive target of making 5,000 mass-market Model 3 vehicles a week at the end of the last quarter. However, concerns about whether it could sustain that pace of production sent the automaker’s shares lower.
“For the past two years, Panasonic has spent on capex and R&D without being able to record revenues against those costs,” analysts at Jefferies said in a recent client report.
“By the end of this financial year, as Model 3 production run-rate becomes stable and sustainable, it (Panasonic) should be able to record profits in its Tesla battery business.”
($1 = 111.3400 yen)
Reporting by Makiko Yamazaki Editing by Christopher Cushing