Osaka-based Matsushita is considered one of Japan's strongest consumer electronics makers, having finished a major restructuring drive last year. Sony Corp, Sanyo Electric Co and Pioneer Corp are all losing money and have been forced to close plants and cut more jobs.
Matsushita has enjoyed explosive demand for plasma TVs, securing dominant market shares in the United States and Japan. It is also making strides in the digital camera market and logging healthy sales of high-end home appliances.
"We simply don't have enough product," Matsushita Senior Managing Director Tetsuya Kawakami said at a news conference, referring to its plasma display TVs. "We can't produce enough panels to keep up with demand."
Matsushita, the world's largest consumer electronics maker ahead of Sony, said group operating profit came to 125.1 billion yen ($1.09 billion) in the July-September second quarter, up from 112.9 billion yen a year ago.
The upbeat results contrast with earnings at South Korean plasma display maker Samsung SDI Co, which reported a 67 percent fall in quarterly profit due to weaker panel prices and poor sales of cathode ray tubes (CRT) for TVs.
But it was Matsushita's devices division that showed the biggest improvement, its operating profit margin jumping to 8 percent from 1.7 percent in the first quarter thanks to the start-up of a chip plant, strong sales of rechargeable batteries and a general uptick in the market for electronics parts.
The quarterly profit result handily beat the market consensus of 97.8 billion yen, according to a poll of nine analysts by Reuters Estimates. Matsushita's own forecast was for an operating profit of 83.98 billion yen.
"The results look pretty good," said Credit Suisse First Boston analyst Koya Tabata, adding that he was most surprised by the level of profitability in the devices division. "It is above the consensus and should be positive for the stock."
Revenues fell 0.2 percent to 2.21 trillion yen, however, on weak demand for stereos and boxy tube TVs, and lower sales of appliances following a bumper second quarter last year when air conditioners sold well due to an unusually hot summer in Japan.
Despite the strong quarterly performance, Matsushita stuck by its full-year forecast for operating profit of 330 billion yen, citing the high price of oil and stiff competition in the global electronics market as reasons behind its cautious stance.
Matsushita President Kunio Nakamura said he was worried consumer sentiment would cool in the United States ahead of the key year-end shopping season, citing the Conference Board's confidence index for October, which hit a two-year low of 85.
"The first half went well but there are risk factors in the second half," Nakamura told a later news conference. "If we are to revise our forecasts that would not happen until after we get a look at the third quarter results."
Nakamura said Matsushita would continue to support Victor Co of Japan Ltd (JVC), a 52.4 percent owned subsidiary that has been the group's Achilles' heel. JVC lost money in the second quarter after design glitches led to missed market opportunities in DVD recorders and flat TVs.
He also said Matsushita had no plans to downsize its cellphone operations, which have been another weak link amid sluggish overseas sales. He said they would regroup and aim for a recovery in the next business year.