Panasonic Shuts Down Fluorescent Light Production in Indonesia

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Panasonic intends to halt fluorescent lights in Indonesia by the end of June 2015, and will be laying off about 700 employees at the plant, reported Nikkei Asian Review.

The plans are part of the company’s fiscal reforms this year to improve profits in low-margin businesses.

Panasonic’s lighting business, including bulbs and fluorescent lights, was once a major profit generator for the company. The spread of LEDs, however, has forced the company to review its traditional lighting businesses.

The company has spun off its fluorescent lamp and bulb manufacturing and sales into a separate company in April 2014, and its decision to withdraw its Indonesian production plant is also part of this process.

About 90% of Panasonic’s fluorescent lamps are made in Indonesia and sold in Japan, but the waning Japanese Yen has eaten into its profit margins. The company will strengthen production in Japan and China and sell its Indonesian plant and land later on.

 The company’s lighting business operating profit margin was 4.7% for the fiscal year of 2014. The company plans to raise sales to 8% to 342.3 billion Japanese yen (US $2.76 billion), and boost operating profit margin to 6.1%. In the meantime, the company will direct its resources to LED lighting, for which there has been a growing demand.

 For this fiscal year, Panasonic plans to increase earnings in lighting, air conditioning, housing materials and three other businesses, which have annual sales of at least 300 billion Japanese yen and an operating profit margin lower than 5%.  

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