Jun 29, 2023
Corporate News / Feature Story
Interview with Group CEO Kusumi #2: Strategy for Growth Areas and Outlook for Group’s Business Portfolio
Yuki Kusumi, Group CEO of Panasonic Holdings Corporation, introduced the medium- to long-term vision and strategy at the Panasonic Group Strategy Briefing in May 2023. This second of two articles introduces his strategy for investment in key growth areas and outlook for the Group’s business portfolio.
Strategy for investment areas
What are the strategies for automotive batteries as the key investment area, in addition to Air quality and Air-conditioning and Supply Chain Management Software?
The automotive battery business is a priority investment area because of the massive scale of investment that Panasonic Holdings Corporation (PHD) will make in this area to drive Group growth.
The basic principle is that the capital we need should be provided by cashflow from operations. For the Air Quality and Air-conditioning business, financing will be done within Panasonic Corporation, and for bolt-on investment in Blue Yonder, which is responsible for supply chain management, Panasonic Connect Co., Ltd. is considering fundraising. However, the scale of investment required for the automotive battery business far exceeds the amount that can be covered by the operating company alone, so PHD made the decision to invest in the business as an essential element for the Group’s growth. From a PGI perspective, this business accounts for 60% of the Group’s Avoided Emissions.
The market for automotive batteries is in a constant state of flux. What kind of batteries do particular customers need? How well we can meet the demands of multiple customers? Will technological progress and cost continue to advance? We need to respond with foresight and action, and believe the time to invest is now. We have a clear view of the potential for growth and our ability to compete.
Panasonic focuses on cylindrical automotive batteries, and has been leading the industry for 30 years by offering higher density and safety at low cost while reducing the use of rare metals. Our cylindrical battery is suitable for cooling during rapid charging, and we expect demand to continue to grow.
Further capacity expansion is on the horizon. We have received tremendous support from state authorities for the construction of our new plant in Kansas. Last fiscal year, we signed battery supply contracts for Lucid’s luxury EVs and for commercial vehicles with Hexagon Purus, and continue to receive new inquiries. Now that preparations are in place to increase production capacity, the automotive battery business is ready to move into a full-fledged growth phase.
In the Air Quality and Air-conditioning business, our competitive products and technologies are bearing fruit in Europe, a leader in addressing environmental issues. Demand is accelerating for Air-to-Water products that help reduce CO2 emissions, so we will grow our global production capacity to one million units by expanding production facilities and promoting local production for local consumption. As the first Japanese manufacturer to introduce natural refrigerants in response to Europe’s F-gas regulations, we can build a competitive advantage.
Turning to supply chain management software, Blue Yonder’s strengths—a solid customer base of over 3,000 companies, a wide range of solution packages, and the technology to deliver holistically optimal solutions—can be leveraged to increase our contribution and reduce environmental impacts. We expect to make further contributions by strengthening our software infrastructure and with autonomous solutions that can utilize data obtained from edge devices—a key advantage of Panasonic Connect Co., Ltd.
The Lifestyle area is an important axis of Groupwide common strategy along with Environment. This area is the Panasonic Group’s founding business and involves extremely important businesses that drive the brand. We have diverse customers touchpoints, including showrooms and dealerships, products and services, and repair support. By combining these touchpoints with digital technology, we can become a Lifestyle Solutions Provider offering value tailored to each individual customer—“the company that understands the lives of its customers better than anyone else.”
Group portfolio of businesses
How do you intend to review the Group’s portfolio of businesses?
Our goal is to increase the Group’s value while delivering benefits to all stakeholders—including shareholders, customers, business partners, and employees. We will examine every business from a long-term perspective based on two key factors: relevance with Groupwide common strategy, and market position and competitiveness.
Businesses that can continue to play a useful role in the future will enhance their competitiveness within the Group, while others will accelerate their growth outside the Group. We will establish concrete assessment criteria, set a direction for reviewing our portfolio during this fiscal year, and then execute accordingly.
The Group’s core direction is to promote businesses that contribute to solving global environmental issues. Together with our other axis, businesses that contribute to the lifelong health, safety, and comfort of each customer, we will transform our response to society and customers, so that by FY 2031 (ending March 2031), every business can be of service in one of these areas.
To be clear, we are not talking about selling off or shutting down any business that doesn’t currently contribute to these two areas. Our intention is not to chase numbers—our intention is to leverage our competitive advantage to contribute to achieving Konosuke Matsushita’s 250 Year Plan. We will address short-term issues and review our strategies from a medium- to long-term perspective.
Solving global environmental issues is the single most important management issue for the coming decade. As a Group, we are determined to make good on our promise to society to enhance our usefulness by greatly expanding the number of businesses that can contribute to solving this issue. This year, we are shifting to a growth phase, accelerating our transformation to achieve our mission.
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