The firm, better known for its Panasonic and National brands, said its net loss for the period would come to 23.5 billion yen, instead of the 25 billion yen profit seen earlier.

Its pre-tax profit was now seen at 59.5 billion yen, down sharply from the previous projection of 96 billion yen.

A revised local tax law, passed at the end of March, will remove a loophole in accounting rules that enables Japanese firms to inflate balance sheets by including such items as deferred tax assets.

The revision would knock 27 billion yen off Matsushita Electric Industrial Co. Ltd.'s net profit.

A slump in Japanese share prices, which saw the Nikkei-225 average of the Tokyo Stock Exchange shed about 30 percent in value in the year, adversely affected pre-tax profit.

"The revision reflects losses of approximately 37.0 billion yen incurred at the end of fiscal 2003 on valuation of investment securities, mainly bank stocks, due to aggravated stock market conditions in Japan," the firm said in a statement.

But progress with a major restructuring plan enabled Matsushita to maintain its revenue forecast at 7.3 trillion yen -- a six percent rise from the previous year.

The revised earnings forecasts are still a massive improvement on the previous year to March 2002, when the company suffered a net loss of 431 billion yen and a pre-tax loss of 548 billion yen.

SPACE.WIRE