Panasonic, the Japanese electronics maker forecasting an annual loss, said its solar-panel operation will probably remain profitable amid growing demand from Japanese homeowners, the head of the business said.

Shipments in February reached a record level as Japan's feed-in-tariff system for electricity triggered demand for rooftop systems, Kazuhiro Yoshida, who heads the business, said in an interview in Tokyo yesterday, declining to elaborate.

Panasonic is targeting Japanese individuals for its HIT- brand solar cells, a strategy that has helped preserve profitability and protect the business from a glut in commercial production, he said. The Osaka-based company is focusing on premium products for residential users as an oversupply in large-scale facilities led to price declines and threatened the survival of Suntech Power, once the biggest solar- panel maker, he said.

“Demand is booming in Japan,” Yoshida said, “It is not our goal to become number one company. Our focus is how to be profitable.”
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Japan is one of the few bright spots among established solar markets globally where a supply glut dragged down panel prices 25 per cent in the past year amid declining demand from Europe as governments cut subsidies.

Japan added 1,119 megawatts of solar energy capacity in the nine months ended Dec. 31 to the 4,800 megawatts already installed, the Ministry of Economy, Trade and Industry said March 13. The country will probably be one of the top three markets this year, according to Bloomberg New Energy Finance.

Government incentives

A committee of experts advising the METI this month recommended the price paid for solar power should be cut beginning April 1.

Even at the reduced rates, Japan's support for solar is about three times the incentives offered in Germany and China, two countries that are among the biggest markets for the technology.

Shares of Panasonic were unchanged at 676 yen in Tokyo trading yesterday. The stock has gained 30 per cent so far this year, outperforming Japan's benchmark Nikkei 225 Stock Average that added 21 per cent.

Suntech Power, based in Wuxi, China, became the solar industry's biggest corporate failure this month while Robert Bosch, the largest car-parts maker, abandoned a near $US2.6 billion foray into solar-power equipment.

Panasonic started shipping solar devices from its new plant in Malaysia this year, as part of its efforts to reduce production costs by 20 per cent, Yoshida said. The company also makes solar cells at two domestic factories and modules at a plant in Hungary.

Production boost

The electronics maker may boost its production of solar panels by about 30 per cent in the year starting April 1 because of the government incentives, Yoshida said in June, without providing a shipment target.

Margins for the solar business are currently between 5 per cent and 10 per cent, Yoshida said yesterday. The company is aiming for a 10 per cent operating margin for the business, he said.

President Kazuhiro Tsuga is set to brief reporters March 28 on a business plan that includes measures to revamp the company.

Panasonic, which is losing money in televisions and mobile phones, is projected to return to net income of 80.5 billion yen in the 12 months starting April 1, compared with a forecast net loss of 745 billion yen this fiscal year, according to the average of 16 analysts' estimates compiled by Bloomberg.