Profit at electronics giant Matsushita, maker of the Panasonic brand, rose 7 percent in the April-June quarter on higher sales of digital audiovisual products and aggressive cost-cutting, the company said Wednesday.

Net income climbed to 35.83 billion yen in the company's first quarter from 33.44 billion yen a year earlier.

Sales rose 4 percent to 2.137 trillion yen, from 2.048 trillion yen.

Osaka-based Matsushita Electric Industrial Co. credited the improved results to brisk sales of flat-screen televisions and other audiovisual equipment. Efforts to cut materials costs also propped up earnings, despite falling prices spurred by competition from cheaper Asian rivals.

Looking ahead, Matsushita said it expects a "severe environment to persist" in the second quarter due to continuing price competition and the increased price of crude oil and other raw materials.

Nevertheless, the company still raised its forecast for first-half net income to 90 billion yen from an earlier outlook of 70 billion yen. The company cited improved sales of flat-panel televisions for the revision, and said it was also expecting a special gain from the planned sale of property and equipment in the half.

Matsushita shares, which have been mostly flat this year, fell 10 yen, or 0.4 percent, to 2,315 yen Wednesday on the Tokyo Stock Exchange. The company released earnings data after the market closed.

Audiovisual products such as flat-screen televisions and digital cameras rose 14 percent, while sales of electronics components chipped in with a 7 percent increase.

On the flip side, sales at the communications equipment unit slid 3 percent.