Matsushita posts higher Q3 profit on plasma TVs

TOKYO (Reuters) - Matsushita Electric Industrial Co. Ltd. (6752.T) reported a 5 percent rise in quarterly profit, driven by robust sales of flat TVs, but it kept its full-year operating profit outlook that falls short of market expectations.

Matsushita, the maker of Panasonic brand products, has been able to cut costs fast enough to keep pace with steep price falls and hold its own against liquid crystal (LCD) TV giants such as Sony Corp. (6758.T).

Operating profit at Matsushita, which controls one-third of the global plasma TV market, totaled 135.83 billion yen ($1.13 billion) in October-December, compared with a 129.42 billion profit a year earlier.

Net profit rose 60 percent to 78.67 billion yen, reflecting the absence of costs related to an early retirement scheme booked in the same period a year earlier.

Quarterly sales rose 1.6 percent to 2.44 trillion yen, its highest third-quarter sales ever.

"We enjoyed strong sales of plasma TVs and digital cameras, which drove our overall revenue," Matsushita Executive Vice President Tetsuya Kawakami told reporters.

In a move to solidify its lead in the plasma TV market, Matsushita plans to spend $2.3 billion to build the world's largest plasma display factory, doubling the capacity of its existing plants, including one due to come on line this summer.

Matsushita, the world's largest consumer electronics maker, stood by its operating profit forecast of 450 billion yen, missing a consensus of 477.5 billion in a poll of 22 analysts by Reuters Estimates.

The company's forecast would mark a rise of 9 percent from a profit of 414.27 billion yen a year earlier.

"The stock may fall as investors had high expectations," said Tomomi Yamashita, a senior fund manager at Shinkin Asset Management.

Yamashita added, however, that earnings results alone are unlikely to move Matsushita shares sharply as investors are focusing more on the fate of Victor Co. of Japan Ltd. (JVC) (6792.T), a struggling consumer electronics maker owned 52.4 percent by Matsushita.

Matsushita is considering cutting its stake in JVC, and potential buyers include audio equipment maker Kenwood Corp. (6765.T), a source close to the situation said in December.

Kawakami said nothing has been decided regarding Matsushita's stance regarding JVC.

Matsushita, which offers Viera brand plasma TVs, raised its 2006/07 net profit forecast to 205 billion yen from 190 billion yen on one-off gains from asset sales and a fall in restructuring costs.

That latest forecast is still shy of a consensus of 220.6 billion yen.

Pioneer Corp. (6773.T), Matsushita's smaller rival in the $21 billion plasma TV market, has had less success in weathering price competition.

The company cut on Wednesday its annual operating profit forecast by one-third after its move not to lower prices as much as the broader market led to sluggish plasma TV sales.

Prior to the announcement, Matsushita shares closed up 0.42 percent at 2,410 yen, in line with the Tokyo stock market's electrical machinery index (.IELEC.T), which rose 0.4 percent.

Matsushita shares lost 5 percent in October-December as liquid crystal display TV makers such as Sharp Corp. (6753.T) boosted their presence in a market for 40-inch TVs and above, which had been considered until recently as a plasma territory. The sub-index gained 4 percent over the same period.