Japan's Panasonic Holdings said on Thursday second-quarter operating profit rose 42% at its battery-making energy unit, as stronger sales of energy storage systems for data centres offset falling demand for automotive batteries.

Operating income for the key segment, which makes batteries for Tesla and other automakers, rose to 32.7 billion yen ( USD 213.82 million), despite a decline in profit from the in-vehicle business.

The company retained its full-year operating profit forecast for the unit at 109 billion yen, however.

Panasonic said the unit was grappling with lower sales in Japan and increased development costs for new customers, as well as ramp-up costs for factories in Kansas and Japan's Wakayama prefecture in the quarter.

Last month, Panasonic Energy said it had finalised preparations for mass production of its 4680 batteries in Wakayama to help automakers extend the driving range of EVs and use fewer cells to achieve the same battery pack capacity.

The unit has sought growth in the North American market by building a second U.S. plant in Kansas set to start production in early 2025 and with another factory in Nevada that provides batteries to Tesla.

It competes with other Asian battery makers such as China's CATL and South Korea's LG Energy Solution , which said on Monday it had a conservative view of revenue growth next year amid slowing EV demand.

Panasonic also maintained its full-year profit forecast for its entire business at 380 billion yen.