TOKYO, Feb 4 (Reuters) - Japan's Panasonic Holdings ( PCRFF )

raised the full-year earnings forecast for its energy

unit, which supplies batteries to Tesla, on stronger

sales of energy storage systems and improved profitability at

its U.S. battery plant.

Panasonic ( PCRFF ) raised the battery segment's full-year outlook

by 14% to 124 billion yen ($798.35 million) after it reported a

39% year-on-year operating profit increase in the third quarter

for the unit.

The unit's rosy result so far this year was spurred by

an uptick in sales of energy storage systems and lower material

prices, along with improved profitability in its in-vehicle

business in North America.

Those factors helped offset an overall decrease in

automotive battery sales which led to reduced production in

Japan and ramped-up costs for two facilities, a new U.S. battery

plant and a renovated factory in Japan's Wakayama prefecture.

Panasonic Energy operates a plant in the U.S. state of

Nevada that provides batteries to Tesla. It plans to open a

second U.S. plant in Kansas this year as it enlarges its

footprint in North America.

Third-quarter operating income for the key segment rose to

42 billion yen ($270.46 million), Panasonic ( PCRFF ) said in financial

materials. The company also retained its full-year profit

forecast for its group's entire business at 380 billion yen.

Panasonic ( PCRFF ) competes with other Asian battery makers such as

China's CATL and South Korea's LG Energy Solution

, which said last month it planned to slash capital

expenditure by up to 30% this year on slowing EV demand growth.

($1 = 155.1800 yen)