Panasonic Holdings Corporation has announced plans to reduce its global workforce by approximately 10,000 employees, representing about 4% of its total staff. This decision comes in response to a 17.5% decline in profit for the fiscal year ending March 2025, with profits dropping to 366 billion yen ($2.5 billion) from 443 billion yen the previous year.

The layoffs will be evenly distributed between domestic and international operations and will involve early retirements, as well as the consolidation or closure of various business units. Panasonic's CEO, Yuki Kusumi, expressed regret over the job cuts while emphasizing the necessity for long-term improvement.

The company attributes the profit decline to a slowing global economy and reduced demand for electric vehicles, although domestic sales of air-conditioners and consumer electronics remained strong. Total sales were slightly down at 8.46 trillion yen ($58 billion).

Looking ahead, Panasonic aims to improve profits through significant management reforms and operational streamlining, forecasting a profit increase of up to 300 billion yen ($2.1 billion) by fiscal 2029. The company expects to incur restructuring costs of 130 billion yen ($896 million) in the current fiscal year as part of its comprehensive company overhaul.

Despite these challenges, Panasonic continues to invest in electric vehicle battery production and plans to expand supply partnerships with Japanese automakers Mazda and Subaru. The company forecasts a 39% increase in operating profit at its electric vehicle battery-making energy business this fiscal year to March 31, 2026, upgrading it to 167 billion yen on expected higher battery and energy storage system demand.

The planned layoffs and business unit consolidations are likely to have significant social and economic implications, affecting a substantial number of employees and their families, both domestically and internationally. Investors and stakeholders may view the restructuring as a necessary step toward improving profitability, potentially influencing market confidence and stock performance.

This is not the first time Panasonic has undertaken significant restructuring efforts. In the past, the company has implemented workforce reductions and business unit consolidations in response to financial challenges. However, the current scale and strategic focus on EV battery production highlight a more targeted approach to align with evolving market demands.

Panasonic's focus on EV battery production aligns with global trends toward electric vehicles, indicating a strategic shift to capitalize on emerging market opportunities. The company faces fierce competition from other Asian battery makers such as China's CATL and South Korea's LG Energy Solution. Chinese battery makers grew faster than rivals to account for more than two-thirds of global EV battery capacity last year, according to data from consultancy Counterpoint Research.

Panasonic Energy has sought to expand its footprint in the North American market. It has a plant in Nevada and has broken ground on a second one in Kansas, which would take its auto battery capacity to 80 gigawatt hours a year.

The company's restructuring aims to improve profit margins—a measure of profitability—of 10% by the fiscal year-end. Panasonic also said it will continue to streamline its IT investments.

Panasonic's strategic shift and restructuring efforts reflect the company's commitment to adapting to changing market dynamics and positioning itself for long-term success in the evolving global economy.