Investing.com -- Japan’s Panasonic (OTC:PCRFY) Holdings has increased its full-year earnings forecast for its energy unit, which provides batteries to Tesla (NASDAQ:TSLA), due to stronger sales of energy storage systems and improved profitability at its U.S. battery plant.
The company has raised the battery segment’s full-year outlook by 14% to 124 billion yen ($798.35 million) after reporting a 39% year-on-year operating profit increase in the third quarter for the unit.
The positive results this year have been driven by an increase in sales of energy storage systems, lower material prices, and improved profitability in its in-vehicle business in North America.
These factors helped balance out a decrease in automotive battery sales, which led to a reduction in production in Japan and increased costs for two facilities, including a new U.S. battery plant and a renovated factory in Japan’s Wakayama prefecture.
The energy unit of Panasonic operates a plant in the U.S. state of Nevada that supplies batteries to Tesla. The company has plans to open a second U.S. plant in Kansas this year as it expands its presence in North America.
In the third quarter, operating income for the key segment rose to 42 billion yen ($270.46 million), according to Panasonic’s financial materials. The company also maintained its full-year profit forecast for its group’s entire business at 380 billion yen.
Panasonic is in competition with other Asian battery manufacturers like China’s CATL and South Korea’s LG Energy Solution. Last month, LG Energy Solution announced plans to cut capital expenditure by up to 30% this year due to slowing growth in electric vehicle demand.
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