Matsushita Electric Industrial Co. formally announced Thursday that it will transform five group firms into wholly owned subsidiaries Oct. 1.

The move, which will be carried out via share exchanges, constitutes an effort by Matsushita Electric to reorganize its group businesses.

It is also aimed at improving operational efficiency and accelerating the development of new products by reducing overlapping business lines and moving researchers into focused business areas within the group, company officials said.

The five group firms are Matsushita Communication Industrial Co., Kyushu Matsushita Electric Co., Matsushita Seiko Co., Matsushita Kotobuki Electronics Industries Ltd. and Matsushita Graphic Communication Systems Inc.

Kunio Nakamura, president of Matsushita Electric Industrial, said that the deal is not designed to cut jobs or close factories, although the company will map out concrete plans on how to reorganize the businesses of the five firms.

With decreased sales in electronic products and devices, the consumer electronics giant, known for its National and Panasonic brands, is expected to report consolidated net losses for fiscal 2001 to March 31.

To reverse the trend, the Matsushita group hopes to raise annual group sales over fiscal 2002 by 5 percent from 6.8 trillion yen in worldwide sales predicted for fiscal 2001, Nakamura said.

Nakamura said the company is reviewing its annual group sales target of 9 trillion yen for fiscal 2003 due to deteriorating performance and the difficult business environment.

The group, however, will try to increase consolidated operating profits by 5 percent in fiscal 2003 from the previous year, he said.