Falling sales hit Panasonic hard

Panasonic is the world's largest maker of plasma TVs

Panasonic has announced a big loss for the year to the end of March as the downturn hits demand for its products such as TVs and digital cameras.

The Japanese electronics giant lost 379bn yen ($4bn; £2.6bn) during the period, and expects to stay in the red in the current financial year.

Falling sales, the strong yen and high restructuring costs were to blame for the poor results, the company said.

On Thursday, rival Sony reported a loss of $1bn for the financial year.

It was the group's first annual loss in 14 years.

'Shrinking demand'

Panasonic said sales for the year fell by 14% to 7.7tn yen.

Overseas sales were hit particularly hard as the strong yen made Japanese exports more expensive for consumers around the world.

Sales of flat screen TVs, digital cameras, home appliances and semiconductors fell.

The group also expects to make a loss of 195bn yen for the year to the end of March 2010, with sales falling a further 10% to 7tn yen.

The grim outlook was due to the "world recession and shrinking demand" as well as a shift towards "lower-priced products", it said.

But despite the predicted losses for this year, some analysts are confident that Panasonic will turn its fortunes around.

"Compared to Sony and other rivals, Panasonic has a good track record of restructuring its way back to profitability," said Takeshi Osawa at Norinchukin Zenkyoren Asset Management.

"I have more faith in Panasonic's ability to recover than I do for other firms," he added.

Earlier this year, the group, which is the world's largest maker of plasma TVs, announced 15,000 job cuts and 27 plant closures worldwide.