Jan 10, 2007

Press Release


FOR IMMEDIATE RELEASE

Media Contacts:	                 Investor Relations Contacts:   

 Akira Kadota (Japan)             Makoto Mihara (Japan)
 International PR  	          Investor Relations 
 (Tel: +81-3-3578-1237)	          (Tel: +81-6-6908-1121)
        		
 Panasonic News Bureau (Japan)	  Akihiro Takei (U.S.) 
 (Tel: +81-3-3542-6205)	          Panasonic Finance (America), Inc.
	                          (Tel: +1-212-698-1365)
 Jim Reilly (U.S.)	
 (Tel: +1-201-392-6067)	          Hiroko Carvell (Europe)
	                          Panasonic Finance (Europe) plc 
 Munetsugu Takeda (Europe)        (Tel: +44-20-7562-4400)
 (Tel: +49-611-235-305) 

Matsushita Electric Announces Annual Management Policy

- Rise to the Challenge! -





Osaka, Japan (January 10, 2007) - Matsushita Electric Industrial Co., Ltd. (Matsushita [NYSE symbol: MC]), best known for its Panasonic brand, today announced its management policy for fiscal year ending March 31, 2008 (fiscal 2008). With the Company's three-year Leap Ahead 21 business plan ending March 31, 2007, President Fumio Ohtsubo revealed a new mid-term business plan to make another leap toward March 2010. Under the plan, Matsushita will enter a new phase for further growth as follows:

1. Reviewing the Leap Ahead 21 Plan

A. Goals aimed under the Leap Ahead 21 plan
Under the plan, to survive the global competition, Matsushita has implemented various initiatives since fiscal 2005. Specifically, the plan aimed to achieve an operating profit to sales ratio of 5% or more and a positive Capital Cost Management (CCM*) index, on a consolidated basis. The Company has made steady progress toward these goals.
*CCM is an indicator created by Matsushita to evaluate return on capital. A positive CCM indicates that the return on invested capital meets the minimum return expected by capital markets.

B. Achievements under the Leap Ahead 21 plan
A lean and agile management style became firmly in place. For example, Matsushita reduced its consolidated total assets by 460 billion yen, from the beginning of the Leap Ahead 21 plan to September 30, 2006, by reducing factory inventories with the introduction of Next Cell Production System, as well as accelerating IT innovation. The Company also implemented Cost Busters Project to reduce costs by about 220 billion yen over the three fiscal years.

To improve its competitiveness, Matsushita endeavored to strengthen products, especially V-products, as strong business pillars and improved its market share.

Collaboration with Matsushita Electric Works, Ltd. (MEW), which became a majority-owned subsidiary in April 2004, created synergies, including development of Collaboration V-products in home appliances and building products. This collaboration contributed to a sales increase of more than 100 billion yen during the two fiscal years.

Under the plan, Matsushita implemented measures to enhance shareholder value, including the ESV (Enhancement of Shareholder Value) Plan, repurchases of its own shares and significant increases in dividends. These measures focused on the interests of shareholders and contributed to enhancing the market capitalization of the Company by about 1.5 trillion yen in the last three years.

Matsushita drove forward various reforms in organization, corporate culture and human resource management. The Company established a new Job Qualification System, the Corporate Diversity Promotion Division and a Skills Evaluation System.

2. Global Excellence Indicators that Matsushita aims to achieve

Matsushita aims for a global excellent company by achieving the following goals:

Sales of 10 trillion yen or more, 60% or more in overseas sales
Operating profit ratio of 10% or more and return on equity (ROE) of 10% or more
Global top share products sales ratio of 30% or more

In addition, it is imperative for the Company to gain a top reputation in terms of corporate social responsibility (CSR) and trusted brand.


3. The GP3 Plan

The new mid-term business plan sets forth milestones and strategies for the Company to enter into its next phase for growth. The plan will guide and challenge the Company so that it becomes the global excellent company that the Matsushita Group aims to be. The three-year business plan to be completed by March 2010 is called the GP3 plan. GP3 stands for (1) Global Progress, evolving through global sales expansion, (2) Global Profit, enhancing profitability worldwide, (3) Global Panasonic, building globally trusted brand.


A. Goals of the GP3 plan
Matsushita aims for 10 trillion yen sales and ROE of 10% for fiscal 2010 ending March 31, 2010.

Sales and ROE are two indicators in the GP3 plan to measure the Company's steady growth with profitability. The former indicates growth, and the latter profitability on stockholders' equity.

B. Priority themes of mid-term growth strategies
(1) Double-digit growth in overseas sales
To aim for double-digit growth in overseas sales of consumer products and to significantly boost consolidated overseas sales, the Company will focus on three points: 1) marketing tailored to regional characteristics; 2) improving product competitiveness through collaboration between sales and production divisions; and 3) strengthening its brands based on product competitiveness.

1) Marketing tailored to regional characteristics
North American and European markets: Matsushita aims to achieve a sales increase of 310 billion yen in the three fiscal years. To realize the goal, the Company will continue to focus on the flat-panel TV business as a basis to significantly boost the sales of digital audiovisual (AV) products. It will strengthen its ties with influential local mass retailers and expand its "XCS (Extreme Customer Satisfaction) Program" implemented in North America. For the Eastern European market, Matsushita will reinforce its marketing structure to increase sales.

China and other Asian countries: A sales increase of 340 billion yen is targeted in the next three fiscal years. Matsushita will actively promote its flat-panel TVs and digital cameras. The region is considered an important market for the white goods and beauty and health-related home appliances.

Emerging markets: Matsushita aims to increase sales of consumer products by 200 billion yen in the next three fiscal years, focusing on priority countries such as BRICs and Vietnam. In Russia, management resources will be concentrated on flat-panel TVs and digital cameras. In Brazil, the Company plans to expand sales of digital AV products with expansion of local production. In India, the Company will mainly focus on flat-panel TVs and air conditioners. In Vietnam, Matsushita will promote marketing tailored to regional characteristics, focused on six major cities.

2) Improving product competitiveness through collaboration between sales and production divisions
To expand its business in the Chinese market, Matsushita will introduce V-products focusing on the daily lives with locally created added value in fiscal 2008. The Company will promote collaboration between sales and production divisions to further reinforce its competitive edge on a global scale.

3) Strengthening brands based on product competitiveness
Matsushita will implement the Global Plasma Caravan, carrying its plasma TVs to 175 major cities in accumulated total in the Americas, Europe and China for the next three fiscal years. The Global Plasma Caravan will provide opportunities for the people to directly experience the high picture quality of plasma TVs.

 


(2) Four strategic businesses
Matsushita has selected four strategic businesses for its sales growth: digital AV business, automotive electronics business, businesses providing comfortable living, and semiconductors and other devices businesses.

  1) Digital AV business
Matsushita considers five product categories as driving force for growth including flat panel TVs, such as plasma TVs and LCD TVs, digital cameras, Blu-ray Disc recorders/drives and high-definition (HD) digital camcorders. The Company plans to increase sales, mainly overseas, by 700 billion yen in the next three fiscal years. The Company has the following targets of global market share of each product category for fiscal 2010:
     
    Flat-panel TVs - target of 25% in the 37-inch or larger: Matsushita will enhance the basic performance of its TVs and expand its plasma TVs of 1080p HD lineups with a 42-inch 1080p HD model scheduled to be launched this spring. The Company will also realize an outstanding cost-competitiveness by utilizing its unrivaled efficiency in investment and production.
     
    Digital cameras - target of 15%: Matsushita will enhance its lineups including single-lens reflex models (SLR). It will also strengthen in-house manufacturing of relevant key devices.
     
    HD camcorders - target of 40%: Matsushita will utilize the strength of SD Card camcorders at its core with their light-weight, compactness, sturdiness and excellent picture quality.
     
    Blu-ray Disc recorders/drives - target of 35% or more: Matsushita will reinforce its advanced technologies, including H.264 video compression technology, as well as enhancing cost-competitiveness.
     
  2) Automotive electronics business
Matsushita will launch a Group-wide project targeting in excess of 1 trillion yen sales in this area in fiscal 2011. Under the GP3 plan, the Company aims to achieve sales of 950 billion yen in fiscal 2010. With a vision of contributing to the creation of a car society filled with dreams, peace of mind and inspiration, the Company will focus on three areas including comfortable car interior space, environment, and safety and peace of mind.
     
  3) Businesses providing comfortable living
Matsushita plans to achieve sales of 3 trillion yen in this area in fiscal 2010. The Company will establish a project providing comfortable living to implement group-wide strategies by further promoting collaboration with MEW. By maximizing the strength of its products and the synergies created by the combination of these products, Matsushita will offer total solutions for homes and buildings.
     
  4) Semiconductors and other devices businesses
In the next three fiscal years, Matsushita aims to increase sales of 240 billion yen with 120 billion yen in semiconductors business and 120 billion yen in other devices businesses.
The Company will strengthen outside sales of devices by expanding its global customer base and further enhancing its capacity in proposing solutions. For the entire device business, Matsushita aims to increase the percentage of globally leading devices to 50%.

(3) Continuous selection and concentration
Matsushita plans to make a capital investment of 1.5 trillion yen and an R&D investment of 1.8 trillion yen over the next three fiscal years. The investments will be focused on the growing businesses such as flat-panel TVs, the advanced priority themes, and the key devices such as semiconductors.

The Company plans to build the fifth PDP plant in Japan, boasting the world's largest production capacity, with a total investment of 280 billion yen. The plant will have a monthly output capacity of 1 million units (calculated based on 42-inch panels) and is scheduled to commence production in 2009. (See the press release "Panasonic and Toray to Build the World's Largest Plasma TV Plant with a Capacity of One Million Units per Month" announced today.)


Toward realization of a manufacturing-oriented company

Manufacturing relates to an entire process of integrated flow from development through marketing and services.
The concept of a manufacturing-oriented company is to combine this process of manufacturing and all activities of the staff that support the process, toward the launch of products to contribute to the creation of customer value.

Manufacturing Innovation Division (planned to be established on April 1, 2007)
The new division will consist of four working groups of manufacturing, V-products, global marketing and management, aiming to realize overall optimization for the Company with its products at the core.

Introduction of a new performance evaluation

For the acceleration of "steady growth with profitability," CCM and free cash flow, the former indicators, will be integrated into CCM, and the sales will be newly added as an indicator of growth. Accordingly, CCM and the sales will be the new indicators of growth.

Aiming at vitalizing the Company

(1) As a public entity
Matsushita's unwavering management philosophy of contributing to society as a public entity has guided its business activities. The Company considers implementing this management philosophy the essence of CSR, which includes promoting environmental management, enforcement of compliance, and strengthening information security, while enhancing transparency of the business, whereby contributing to the society as a whole.

(2) Nurturing corporate culture with diversity
Matsushita will implement the following measures to nurture a corporate culture where employees respect the personality of each individual and develop abilities through competition for excellence. The Company believes that such a culture will encourage employees to activate their potentials to the fullest extent while they work together toward its growth worldwide:

  1) Further promoting employees based on skills and capabilities, regardless of gender, age or nationality
  2) Encouraging personnel exchanges beyond the border between countries or business domains
  3) Building a structure to promote communication worldwide
  4) Accelerating implementation of Flat & Web, skill evaluation, and e-Work or teleworking system

Elimination of product quality problems

Matsushita has been making every effort to fully recover its trust by solving problems regarding kerosene fan heaters in Japan. The lessons learned from incidents over the past years have renewed its strong commitment to safety and quality. The Company reaffirms that safety and quality always come first.


4. Management slogan for 2007

 

About Matsushita
Best known for its Panasonic brand name, Matsushita Electric Industrial Co., Ltd. is a worldwide leader in the development and manufacture of electronic products for a wide range of consumer, business, and industrial needs. Based in Osaka, Japan, the Company recorded consolidated net sales of US$76.02 billion for the year ended March 31, 2006. The Company's shares are listed on the Tokyo, Osaka, Nagoya and New York (NYSE:MC) stock exchanges. For more information on the Company and the Panasonic brand, visit the Company's website at http://panasonic.net/.


Disclaimer Regarding Forward-Looking Statements
      This press release includes forward-looking statements (within the meaning of Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934) about Matsushita and its Group companies (the Matsushita Group). To the extent that statements in this press release 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 Matsushita 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 Matsushita 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. Matsushita undertakes no obligation to publicly update any forward-looking statements after the date of this press release. Investors are advised to consult any further disclosures by Matsushita in its subsequent filings with the U.S. Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934.
      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 Matsushita Group operates businesses, or in which assets and liabilities of the Matsushita Group are denominated; the ability of the Matsushita 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 ability of the Matsushita Group to achieve its business objectives through joint ventures and other collaborative agreements with other companies; the ability of the Matsushita Group to maintain competitive strength in many product and geographical areas; the possibility of incurring expenses resulting from any defects in products or services of the Matsushita Group; the possibility that the Matsushita 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 Matsushita Group has holdings or changes in valuation of long-lived assets, including property, plant and equipment and goodwill, and deferred tax assets; future changes or revisions to accounting policies or accounting rules; as well as natural disasters including earthquakes and other events that may negatively impact business activities of the Matsushita Group. The factors listed above are not all-inclusive and further information is contained in Matsushita's latest annual report on Form 20-F, which is on file with the U.S. Securities and Exchange Commission.

      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 are usually included as part of operating profit (loss) in the statement of income.

      The targets of new mid-term business plan are based on the current business organization and business segments, and the assumptions of management environment are as follows
- Economic forecast   Japan: gradual recovery trend
    U.S.: a slight slowdown but steady
    Europe: quite favorable
    Asia: High growth in China and the Asian economy is steady overall
- Raw materials prices (including oil, metals and plastic materials): No significant change


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