Matsushita takes £86 million hit from overheating batteries

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Matsushita said that Nokia's replacement of mobile phone batteries manufactured by the Japanese electronics firm is likely to cost it up to $172 million (£86 million).

Nokia, the world's largest mobile phone maker, earlier this month warned consumers that 46 million batteries made by Matsushita and used in its mobile phones could overheat, and offered to replace them for free.

Matsushita said it had no plan to revise its earnings outlook.

The world's largest consumer electronics maker expects its group operating profit to grow 3.8 per cent from a year earlier to 477 billion yen (£2 billion) for the year to March 2008.

Nokia said earlier in the day Matsushita Battery Industrial Company, Matsushita's wholly owned battery subsidiary, will cover the direct costs related to the replacement.

Most Japan-based analysts had expected replacement costs to total somewhere between 10 and 50 billion yen (£43 to £219 million), but some have suggested they could reach as high as 138 billion yen (£605 million), weighing on Matsushita shares.

Nokia's Japan unit plans to hold a news conference on the batteries in question. Nokia Japan President Tyler McGee will attend the Tokyo briefing.

The Japanese unit has said about 160,000 battery packs will be targeted by the replacement program in Japan.

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