Eco Solutions Company

Business Policy

May 30, 2018

Makoto Kitano, President
Panasonic Corporation
Eco Solutions Company

FY2018 Results
The Company Vision and Business Strategies
FY2019 Business Policy
 FY2018 Results

Increased sales and OP, reversing 2-year consecutive decrease

Achievement of published forecast of ES Segment (OP)

Sales Operating profit

(Billion yen) Eco Solutions
Segment
(Billion yen)
1,623.5
Eco Solutions
Segment
1,957.4 （+0.5 from published
72.5
forecast）

Eco Solutions
Segment
81.2

Housing Systems
Eco Solutions 64.2

Effect of exchange rates

PanaHome
Segment

Panasonic Ecology
Systems
1,547.3

Others
75.6
Others

Effect of exchange rates

Housing Systems

PanaHome

Systems
Energy
Panasonic Ecology
Systems

1,881.7

Lighting
Systems
Energy
Lighting

in real terms excluding effect

FY17 of exchange rates FY18 FY18 FY17 +5.4 FY18 FY18
+4% (excluding effect of
exchange rates)
(excluding efffect of
exchange rates)

Eco Solutions Company Business Policy 2

FY2018 Achievements and issues

・Achieved sales increase by off-setting ・Great extension of overseas businesses

sales decrease with sales expansion from (+22% from the previous year)
(China, India, etc.)
other businesses.
Achievements

Sales（by categories）
(Billion yen) 1,957.4 1,957.4
B2C business
(domestic)
B2B2B/C
business

1,881.7 1,881.7
(overseas)
B2B2B/C
business
Non-Solar
Solar

FY17 FY18 FY17 FY18

・Growth of PanaHome (currently renamed as Panasonic Homes)

Issues

・Dealing with shrinking domestic construction market in and after 2022

Eco Solutions Company Business Policy 3

FY2018 Results
The Company Vision and Business Strategies
FY2019 Business Policy

Market environment
・Predict market expansion by sustained GDP growth in main regions
・Three priority regions of Eco Solutions Company maintain high growth.

The Americas Europe and CIS China and North East Asia
Overseas

+4％ +4％ +7％

FY19⇒FY21 CAGR
*
ISAMEA Asia and Oceania Nominal GDP growth rate of
each country is weightedly
+11％ +8％ .
averaged by our sales
composition ratio
*India, South Asia, and Middle East and Africa

・Both new residential starts and new non-residential starts will remain slightly decreased until 2021.
・In and after 2022, market shrinkage is forecasted.

[10,000 houses] New residential starts [10,000 m2] Floor area of non-residential
construction
Domestic

100 5,000
80 4,000
60 3,000
40 2,000
20 1,000
0 0
FY18 18年度
17年度 FY19 19年度
FY20 20年度
FY21 FY18 18年度
17年度 FY19 19年度
FY20 20年度
FY21
*Source: Estimated by ES

Eco Solutions Company Business Policy 5

 Eco Solutions Company Vision
Evolution of category;
B2B2B/C = “Space Innovation Business” to create comfortable space
B2C = “Lifestyle Innovation Business” to create abundant time

Expand “A Better Life” to home, town and society

Make a better, comfortable “life” with human-oriented solution

Eco Solutions Company Business Policy 6

Numerical goal

Following FY18, continue to increase sales and OP.

Growth is driven by overseas.

FY18 FY19 … FY21

Sales
(Trillion yen) 2.27
1.96 2.06
Overseas

Space Innovation
… Domestic business

Lifestyle Innovation
business

OP 4.1% 4.9% 5.5% Overseas sales

500 billion yen
Overseas ratio 16.6% 17.5% 22% （CAGR* 115%）
*FY18→FY21
（Exchange rate）US$1.00 = 111 yen 105 yen 105 yen

Eco Solutions Company Business Policy 7

Business strategy outline

Space Innovation business

Overseas electrical construction materials
Disclosed
Lighting ▸ Concentrate resources to 3 focus businesses by 3 focus regions.
Electrical
Disclosed ▸ Roll out solution businesses in collaboration with leading partners.
Energy Systems construction
materials
Disclosed
Panasonic Ecology Systems
Domestic electrical construction materials
▸ Further reinforcement of market dominance of electronic
Disclosed
Housing Systems Housing material product, which forms the foundation of space
materials innovation.
▸ Expand value chains by reinforcing engineering business.
Lifestyle Innovation business ▸ Accelerate preparation for space innovation considering
Disclosed
FY2022 and after.
Panasonic Homes
Construction
Construction Solution
Business Construction
▸ Sales growth by creating synergy in the Group.
Panasonic Cycle
Technology Bicycles ▸ Expand business fields to non-residential and urban
development businesses.
AGE-FREE Senior care
▸ Reinforce wooden housing business.

Disclosed Business who sales are disclosed

Eco Solutions Company Business Policy 8

Business Portfolio

Overseas
electrical construction
materials

Domestic
Stable-growth electrical construction
materials
Sales growth Stable-growth
along with profits
OP ratio

Create sustainable profit +

prepare for new space innovation
Housing
materials
Low-profitable Const-
ruction
Profit
improvement Stable-growth

To black in figure Sales growth

along with profits
Sales
0%
(Billion yen)
400 800
Solar Low-profitable
FY18 FY21
*Overseas electrical construction
materials and domestic electrical
construction materials exclude solar.
The size of circle is proportional to OP amount.

Eco Solutions Company Business Policy 9

 Space Innovation Business
(Overseas electrical construction materials)
Build a system for growth from April 2018.
Positive offensive towards overseas sales of 500 billion yen (Business divisions system through development,
in FY2021. manufacture, and sales integration under
the regional initiative)
Concentrate resources to 3 focus businesses by 3 focus regions.
* Overseas sales of
China Asia ISAMEA
Eco Solutions
Lighting (Billion yen) 500.0
・ Increase sales by electronic ・ Expand sales channels in Indian Solution
・ Increase sales by introducing
commerce. apparatus to electrical market.
construction material and lamp
360.0
・ Increase sales of high-
channel. ・ Reinforce sales in expanding 325.0
functional products by OtoO*.
・ Promote transactions of specific plant and office areas.
areas. 3 focus businesses
*Online to Offline （Commercial facilities and offices） by 3 focus regions

Ecology Systems Energy Systems

・ Capture new markets and ・ Expand variety of wiring
・ Launch strategic products for
devices.
new sales channels. wiring devices in India.
(High functional wiring products, etc.)
(Regional cities and non- ・ Reinforce breaker business
for rolling out comprehensive ・ Roll out home distribution board FY18 FY19 FY21
residential, etc.)
electrical construction solutions.
material business. Wiring device
share CIS Global
(Our estimate) No. 2

* India, South Asia, and Middle East and No. 1

Africa in Turkey
Roll out solution businesses in collaboration with Middle in India
No. 1

leading partners. Africa East

• Develop cooperating partners in each country who can
Entry into markets for achieving
amalgamate our products and business with local needs. global No. 1 in wiring devices.
Developers, etc. (i.e. China, India, Taiwan etc.)

Eco Solutions Company Business Policy 10

Space Innovation Business

(Domestic electrical construction materials)
Further enhancement of market advantage in electronic
Sales of domestic electrical
material product, which forms the foundation of space innovation. construction material

Lighting (LED lighting fixtures) Energy Systems Ecology Systems (Billion yen)
720 747
696
For For For Wiring Home Condominium
Distribution Ventilators
Residential Facilities Stores devices panels HA

1st 1st
place 1st 1st 2nd 2nd
place 1st place place place
place
place
*Quantity share (our estimate)

• Continue to launch high-value-added products and promote FY18 FY19 FY21

sales approaches adjusted to characteristics of markets and areas.
• Capture demand for non-residential construction materials
centering on the Tokyo metropolitan area including
Tokyo Olympics related demand Sample of non-residential project
Expand value chains by reinforcing engineering business.
FY21:123 billion yen (FY18 ÆFY21 CAGR +11%）
• Reinforce system integration functions by starting up a new system and
make quick action for the demand for stock of non-residential.
Local Positioning System
Accelerate preparation for space innovation considering FY2022 and after.
• New Space Innovation using linked light, sound, image and air
Lighting Provide solutions by new lighting that merges sound, image, and information with lighting.

Energy Systems Create new value of experience by expanding equipment that can be connected, speech-
recognition, and IoT evolution (energy-saving + security, comfort, and convenience.)
Ecology Systems Create new IAQ* value by controlling ventilation, humidity, and airstream. * Indoor Air Quality

Eco Solutions Company Business Policy 11

 Lifestyle Innovation Business (Construction)
Construction Sales
Sales growth by creating synergy in the Group (Billion yen)
475
408 445
Sales (composition ratio) Multi-storied residence, non-
25% residence, and urban development
9%
32% 33% Condominium, renovation, etc.
Shift to popular price-range Panasonic Homes
12% Popular price-range residence
residence, non-residential and 59% 30% Medium-class to high-end residences
urban development, and grow.
FY18 FY26 FY18 FY19 FY21

× Construction Solution × Housing Systems

Expand business fields to non-residence and Reinforce wooden residence business
urban development businesses. Capture popular price-range in collaboration with
Unify general contractor functions, share know-how, and reinforce building frame related material business
construction capabilities. (wooden PSJ construction method*).

*New construction method for wooden house

industrialization

Kento Senior Citizens Wellness Tsunashima Osaka University Global Village

Residence in Kishibe, Suita City Sustainable Smart Town Large-size roof panels, wall panels, etc.

×
Provide homes & town with new value created with the technology and resources of all
Æ Increase presence of

Residential Non-residential/Town

Expand sales of
Eco Solutions Company Business Policy goods by appealing space value as showcase 12

FY2018 Results
The Company Vision and Business Strategies
FY2019 Business Policy
 FY2019 Forecast
Continuing to increase sales and OP

Sales Operating profit

(Billion yen) (Billion yen)

2,061.0 101.0

Efficet of exchange rates

Effect of exchange rates

Others
Others
Panasonic Homes

Panasonic Homes
Housing Systems

Housing Systems
Panasonic Ecology
Systems
Panasonic Ecology
Systems

1,957.4 81.2
Systems
Energy

Systems
Energy
Lighting
Lighting

in real terms effect of

FY18 exchange rates FY19 FY19 FY18 +18.6 FY19 FY19
+6% (excluding effect of
exchange rates)
(excluding effect of
exchange rates)

Eco Solutions Company Business Policy 14

FY2019 Business Strategies

Overseas
• Increase sales by integrated structure of Manufacturing and Sales
Lighting focused on China, India and Indonesia.
Domestic
• Increase sales by rolling out high-value-added products for each target.

Overseas
• Reinforce resources and increase sales of wiring devices centering on
Energy
India and Vietnam.
Systems Domestic
• Capture demand of renewal market centering on system equipment.
Overseas
Panasonic • In China, capture electronic commerce market, and in North America,
Ecology expand variety of residential products.
Domestic
Systems • Expand profits by shifting to high-value-added products such as heat
exchange ventilation fan.
materials

• Increase sales of medium to high-end products in the remodeling market.

Housing

Housing
Systems • Improve sales growth along with profit by strengthening customer contacts by
salesperson

• Increase revenue by reinforcing new construction contract and etc.

Panasonic - Enhance the sales of low-rise detached residence by utilizing the best
Homes of Panasonic brands.
- Expand Multi-storied residence business mainly in the Tokyo metropolitan area.

Eco Solutions Company Business Policy 15

Disclaimer Regarding Forward-Looking Statements

This presentation includes forward-looking statements (that include those within the meaning of Section 27A of the U.S. Securities Act of
1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended) about Panasonic and its Group
companies (the Panasonic Group). To the extent that statements in this presentation 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
Panasonic 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 Panasonic 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. Panasonic undertakes no obligation to publicly update any forward-looking statements after the date of this
presentation. Investors are advised to consult any further disclosures by Panasonic in its subsequent filings under the Financial Instrument
and Exchange Act of Japan (the FIEA) and other publicly disclosed documents.
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 Americas, 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; the possibility that excessive currency rate fluctuations of the U.S. dollar, the euro, the Chinese yuan and other currencies
against the yen may adversely affect costs and prices of Panasonic’s products and services and certain other transactions that are
denominated in these foreign currencies; the possibility of the Panasonic Group incurring additional costs of raising funds, because of
changes in the fund raising environment; the possibility of the Panasonic Group not being able 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 possibility of not achieving expected results or incurring unexpected losses in connection with the
alliances or mergers and acquisitions; the possibility of not being able to achieve its business objectives through joint ventures and other
collaborative agreements with other companies, including due to the pressure of price reduction exceeding that which can be achieved by
its effort and decrease in demand for products from business partners which Panasonic highly depends on in BtoB business areas; the
possibility of the Panasonic Group not being able 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 Panasonic Group; the possibility that the Panasonic 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 financial assets in which the
Panasonic Group has holdings or changes in valuation of non-financial assets, including property, plant and equipment, goodwill and
deferred tax assets; future changes or revisions to accounting policies or accounting rules; the possibility of incurring expenses resulting
from a leakage of customers’ or confidential information from Panasonic Group systems due to unauthorized access or a detection of
vulnerability of network-connected products of the Panasonic Group; as well as natural disasters including earthquakes, prevalence of
infectious diseases throughout the world, disruption of supply chain and other events that may negatively impact business activities of the
Panasonic Group. The factors listed above are not all-inclusive and further information is contained in the most recent English translated
version of Panasonic’s securities reports under the FIEA and any other documents which are disclosed on its website.
(reference) Sales disclosed businesses

✔ Sales disclosed businesses Main products/ service

• Lighting equipment (for residential,

9 Lighting facility, out door, store etc.), lighting
device, lamp

• Wiring device, home distribution board,

9 Energy electric tool, condominium HA,
Systems HEMS/BEMS, solar PV system

• IAQ related equipment

9 Panasonic (ventilation system, ceiling fan, air purifier),
Ecology Environmental Systems and Engineering
Systems (purifying system of water, air and soil)
• System kitchen, system bathroom,
materials
Housing

9 Housing tankless toilet, interior door, floor

Systems material, delivery box, drainpipe, roof
material
• Low-rise detached residence, multi-
9 Panasonic
storied residence, renovation, urban
Homes
development

(Construction • Construction, interior finish work

Solution)

(Panasonic
• Power-Assisted Bicycle, electric Motor Unit
Cycle Technology)
• Elderly care service & products,
(AGE-FREE)
remodeling for elderly care

Eco Solutions Company Business Policy 18