TIDM35SV
RNS Number : 2741R
Pioneer Corporation
28 April 2009
For Immediate Release
April 28, 2009
Pioneer Announces Medium-Term Management Plan
TOKYO - Pioneer Corporation has announced that at a meeting of its Board of
Directors held today, the Company passed a resolution on a medium-term
management plan. Details are as follows.
I. Restructuring Measures
Pioneer is currently implementing restructuring centered on business portfolio
realignment. Other restructuring priorities are to streamline the business
framework of the entire Pioneer Group, and improve the Company's financial
position.
1. Business Portfolio Realignment
In the Home Electronics business, Pioneer will completely withdraw from the
display business after ending plasma TV sales during fiscal 2010, the year
ending March 31, 2010. Accordingly, the Company is currently closing production
facilities and reviewing organizations and personnel levels at related
divisions. In the optical disc business, Pioneer will form a joint venture with
Sharp Corporation with the aim of restoring this business to profitability by
taking advantage of the strengths of both companies. We are currently discussing
the details of the joint venture, which we plan to establish by October 1, 2009.
Going forward, Pioneer will develop the Home Electronics business centered on
home audio/video (AV) products, DJ equipment and cable TV set-top boxes.
Pioneer will position the Car Electronics business, with its outstanding
technological expertise, product lineup and brand power, as a core business. In
this business, we will work to build stronger operations that can stay on top of
changes in the operating environment. Meanwhile, through strategic alliance with
other companies, the Company will strive to actively create new markets and
business domains in a timely and cost effective manner.
Specifically, Pioneer has agreed with Mitsubishi Electric Corporation to jointly
develop hardware and software for use in car navigation systems and car AV
products. The two companies have mutually used certain car navigation software
technologies since 2002. This new agreement was the result of discussions on the
possibilities for further cooperation in technological development related to
car navigation systems and car AV products.
Pioneer will also strive to expand business in China. On April 23, Pioneer
signed a basic agreement with Shanghai Automotive Industry Corporation (Group)
to establish a joint venture specializing in the development and sale of
intelligent transport systems and provision of related services as well as in
the development and sales of car AV products and car navigation systems.
2. Streamlining the Business Framework of the Entire Pioneer Group
Pioneer is working to streamline organizations to match the new business scale
after business portfolio realignment.
We plan to consolidate our current network of 30 production companies around the
world by closing nine companies and downsizing the operations of six companies.
Regarding our sales structures in Japan, we will combine sales divisions with
five sales subsidiaries in the Car Electronics business. Meanwhile, in the Home
Electronics business, we will proceed with restructuring, while combining sales
divisions, including those at subsidiaries, into a sales subsidiary. Overseas,
we plan to overhaul organizations and structures in Europe, North America, Asia
and other regions. Furthermore, we will reorganize operations with the aim of
optimizing the efficiency of Headquarters and back office functions. This will
involve integrating Pioneer's domestic network of five operating bases into two
locations at Kawasaki and Kawagoe. As for R&D, we will select and focus on R&D
themes that match the realigned business portfolio.
Through this business framework streamlining, we plan to reduce group-wide
personnel by around 5,800 regular employees and about 4,000 temporary and
contract employees, compared with our workforce as of December 31, 2008.
The number of directors/executive officers will be reduced from 25 to 19 after
the annual general meeting of shareholders to be held in June 2009.
3. Improving the Company's Financial Position
At present, Pioneer is working hard to improve its financial position. Given
that it is projecting business restructuring expenses of JPY47 billion in fiscal
2010, the Company believes it must generate cash and boost equity capital.
Through its own continuing efforts, Pioneer will work to generate cash mainly by
reducing inventories and accelerating trade receivables collections, curbing
capital expenditures, cutting directors'/executive officers' remuneration and
employees' salaries, and selling idle assets.
Meanwhile, Pioneer has received additional loans from its main banks, and
expects to maintain good relationships with them going forward.
In regard to boosting equity capital, the Board of Directors resolved today to
raise JPY2.5 billion through a third-party allotment of shares to Honda Motor
Co., Ltd. In addition, Pioneer continues to examine other possible financial
partnerships. Details will be announced once they have been determined.
Pioneer believes that it will need to raise around JPY40 billion in order to
promptly and steadily implement its medium-term management plan. For fiscal
2010, Pioneer is forecasting business restructuring expenses of JPY47 billion,
mainly for personnel reduction. Combined with the cost savings from
restructuring under way since fiscal 2009, total fixed cost reductions are
projected at JPY50 billion in fiscal 2010 and JPY85 billion in fiscal 2011,
respectively, compared with fiscal 2009.
Note: The above figures do not include the impact of the joint venture that is
currently being discussed with Sharp Corporation.
II. Medium-Term Management Plan
Regarding medium-term consolidated forecasts, Pioneer is projecting an operating
loss and net loss for fiscal 2010 in connection with the implementation of
aforementioned restructuring measures and other factors. However, Pioneer
expects to complete restructuring during fiscal 2010, and in fiscal 2011 on
beyond plans to restore operating profitability in both the Car Electronics and
Home Electronics businesses and move back into the black in terms of
consolidated net income.
Consolidated business forecasts through fiscal 2012 are as follows:
+-----------------------+-+--------------+-+-------------+-+--------------+-+-------------+
| | | | | | | (In millions of yen) |
+-----------------------+-+--------------+-+-------------+-+------------------------------+
| | | Fiscal 2009 | |Fiscal 2010 | | Fiscal 2011 | |Fiscal 2012 |
+-----------------------+-+--------------+-+-------------+-+--------------+-+-------------+
| Operating | | JPY558,000 | | JPY420,000 | | JPY(410,000) | | JPY460,000 |
| revenue | | | | | | | | |
+-----------------------+-+--------------+-+-------------+-+--------------+-+-------------+
| Operating | | (55,000) | | (33,000) | | 15,000 | | 22,000 |
| income | | | | | | | | |
| (loss) | | | | | | | | |
+-----------------------+-+--------------+-+-------------+-+--------------+-+-------------+
| Net | | JPY(129,000) | | JPY(83,000) | | JPY8,000 | | JPY16,000 |
| income | | | | | | | | |
| (loss) | | | | | | | | |
+-----------------------+-+--------------+-+-------------+-+--------------+-+-------------+
Note:The above figures do not include the impact of the joint venture that is
currently being discussed with Sharp Corporation.
We are assuming an average yen-U.S. dollar exchange rate of JPY90 and an average
yen-euro exchange rate of JPY115 for forecasts for fiscal 2010 onward.
Pioneer expects net assets to decrease in fiscal 2010 due to restructuring. From
fiscal 2011, however, net assets are projected to increase as earnings improve.
Concurrently, the Company will work to reduce net interest-bearing debt.
Pioneer is considering plans to raise roughly JPY40 billion to meet anticipated
funding needs for business restructuring expenses and the redemption of
convertible bonds in fiscal 2010 and fiscal 2011.
In terms of cash flows, in fiscal 2010 Pioneer expects operating activities to
use net cash of JPY16 billion, mainly based on the expectation of a net loss,
despite a projected decrease in inventories. Investing activities are also
projected to use net cash of JPY9 billion, despite the anticipated sales of
fixed assets. Free cash flows are forecast at a negative JPY24 billion. From
fiscal 2011, Pioneer expects operating cash flows to improve and free cash flows
to be more than JPY20 billion, based on the projected earnings improvement.
For fiscal 2009, Pioneer is forecasting inventories of JPY85 billion and an
inventory turnover rate of 76 days as of March 31, 2009. Pioneer subsequently
expects inventories of JPY51 billion and an inventory turnover rate of 37 days
as of March 31, 2012, mainly based on efforts to shorten production lead-times
and boost sales as well as the impact of withdrawing from certain businesses.
Meanwhile, Pioneer is forecasting capital expenditures of JPY46 billion in
fiscal 2009, mainly because the Company recorded investments in software for
sale due to the adoption of Japanese GAAP. Capital expenditures are projected at
JPY25 billion for fiscal 2010, based on reduced overall investments in step with
the downsizing of operations. From fiscal 2011 onward, capital expenditures are
projected to increase as Pioneer makes investments designed to spur business
expansion, particularly in the Car Electronics business. Consequently, capital
expenditures of JPY32 billion are anticipated in fiscal 2012.
1. Car Electronics Business Strategies
Pioneer expects lower Car Electronics operating revenue in fiscal 2010, mainly
due to the impact of the global recession and weak auto sales. However, Pioneer
is targeting operating revenue of JPY311 billion and operating income of JPY15
billion in fiscal 2012. Total OEM sales are expected to account for a higher
percentage of Car Electronics operating revenue in fiscal 2012, at approximately
45%.
Looking at the growth scenario for the Car Electronics business, in fiscal 2010,
Pioneer plans to implement drastic restructuring to build a highly efficient,
lean operating structure that can quickly respond to changes in the business
environment. Under this streamlined structure, we will boost our earnings in
existing business domains while laying the groundwork for future business
expansion when the market recovers. Over the medium term, we aim to expand the
Car Electronics business by focusing on products and markets that will retain
high growth potential going forward. Over the long term, we plan to expand
business domains in new fields like the environment and car safety and
reliability, while continuing to develop the conventional car entertainment
field. In these ways, we aim to be a leading company in the car electronics
fields.
In the consumer-market business, we will launch affordably priced models in the
overseas car navigation and car AV product markets, where future growth is
expected. We are also looking to actively expand business in growth markets,
particularly in newly emerging economies, centering on our car AV products. In
Japan, we aim to stimulate new demand by establishing a telematics business.
In the OEM business, we will bolster ties with longstanding major clients Toyota
Motor Corporation and Honda Motor Co., Ltd, as well as fulfil our duties as a
supplier and meet the expectations of automakers. By harnessing proposal
capabilities honed in the consumer-market business, we will work to expand the
assembly line product and dealer-option businesses with an emphasis on car
navigation systems. Efforts will also be focused on newly emerging markets,
which promise high levels of growth. Especially in China, we will strive
to expand business centered on our longstanding major Japanese clients, as well
as through the joint venture with Shanghai Automotive Industry Corporation
(Group).
In initiatives to develop new growth businesses, Pioneer will bolster
environmental initiatives that address the need for more energy-efficient,
compact and light products. Strengthening our hand in new media and content such
as Blu-ray Discs and networking capabilities are also important.
Looking ahead, as the auto industry becomes increasingly conscious of global
environmental issues and seeks to help create more comfortable, safer and
reliable motorized societies, the integration of automobiles and automotive
information terminals should proceed apace. In this context, Pioneer plans to
develop car navigation systems into a "gateway" for the flow of information
between automobiles and the outside world. Specifically, Pioneer will work to
increase the sophistication of car navigation systems by developing systems that
are linked to and operate together with vehicles, with the aim of helping to
build safer and more reliable motorized societies. In the services domain, we
will develop business-use services such as fleet operation and management
services. In the information and content domain, our priority is to provide
real-time content including "probe" information obtained from vehicles.
We will also work to expand business in the environmental domain. One initiative
is to develop more energy efficient and lighter products in preparation for the
electric vehicle era. These products will help to boost the energy efficiency
and fuel economy of electric vehicles.
To expand its business domains in this manner, Pioneer will strive to bolster
and drive growth in the Car Electronics business by honing unique technologies,
while continuing to build closer business relationships with automakers and to
deepen collaboration with business partners.
2. Home Electronics Business Strategies
In the Home Electronics business, Pioneer will focus on three main fields: home
AV products, DJ equipment and cable TV set-top boxes. Home Electronics operating
revenue is projected to decrease in line with business portfolio realignment.
Nonetheless, we are determined to turn the Home Electronics business around by
capturing restructuring benefits. In fiscal 2012, we are targeting operating
revenue of JPY73 billion and operating income of JPY3 billion.
Note:The above figures do not include the impact of the joint venture that is
currently being discussed with Sharp Corporation.
In home AV products, we are positioning AV receivers, where we have an extensive
product lineup covering high-end to middle-market price ranges, as core
products. We will concentrate business resources on these products in a bid to
boost sales. We expect the AV receiver market to remain of a certain size going
forward. By redoubling our commitment to this field, we hope to establish
Pioneer as a leading brand in the field and generate steady earnings. We will
also create entirely new markets with audio products based on new concepts.
Through collaboration with housing-related companies, we are also rolling out
new built-in home audio systems that cater to living environments within the
home. In this manner, we are bolstering the audio business, where Pioneer
started out as a company. Our goal is to restore profitability by boosting sales
of new-market products and by improving cost effectiveness by reducing fixed
expenses.
Pioneer has established a dominant leading position in the DJ equipment
industry. In this field, we seek to drive earnings growth by further stimulating
and expanding the market through continuous product development that satisfies
the demands of professional use. These efforts will build on our outstanding
technological expertise and product planning capabilities, which have made
Pioneer DJ equipment the de facto industry standard, and the trust we have
achieved with professional DJs and nightclubs. In the existing DJ equipment
business, Pioneer will strive to extend its product lines and capture more
market share, as it steps up sales in Japan, North America, Europe as well as
newly emerging markets. In addition, taking full advantage of our industry
position and brand power we plan to advance into the entire market for nightclub
facilities by introducing audio facilities/equipment and expanding video
facilities/equipment. Through these steps, we aim to achieve further growth by
expanding our business domains.
As to cable TV set-top boxes, where the Company conducts business in Japan,
Pioneer commands a strong position with a 30% share of the domestic market. At
present, we are working to encourage more cable TV stations to adopt our
products, with the aim of increasing the number of such cable TV stations by 20
compared with fiscal 2009 to 140 in fiscal 2010. The cable set-top box market is
seeing demand fuelled by digitalization, and demand for regular replacement of
products in use at subscribers' homes can also be expected. Building on
long-standing trust and our current market position, we seek to steadily expand
business to generate stable earnings.
Pioneer currently faces extremely difficult circumstances. Undaunted, we are
determined to do everything we can to see restructuring through and restore
profitability. The continued understanding and support of all stakeholders will
be vital to this end.
III. Revisions to Consolidated Business Forecasts
Pioneer has revised its full-year consolidated business forecasts for fiscal
2009 (April 1, 2008 to March 31, 2009), which were announced on February 12,
2009. Details are as follows:
+---------------------------+-+--------------+-+--------------+-+-------------+-+-------------------+
| | | | | | | (In millions of yen) |
+---------------------------+-+--------------+-+--------------+-+-----------------------------------+
| | | Revised | | Previous | | Changes | |Results forfiscal |
| | | forecasts | | forecasts | | (A - B) | | 2008 ** |
| | | for fiscal | | for fiscal | | | | |
| | | 2009 (A) * | | 2009 (B) * | | | | |
+---------------------------+-+--------------+-+--------------+-+-------------+-+-------------------+
| Operating | | JPY558,000 | | JPY560,000 | | JPY(2,000) | | JPY774,477 |
| revenue | | | | | | | | |
+---------------------------+-+--------------+-+--------------+-+-------------+-+-------------------+
| Operating | | (55,000) | | (69,000) | | 14,000 | | 10,907 |
| income | | | | | | | | |
| (loss) | | | | | | | | |
+---------------------------+-+--------------+-+--------------+-+-------------+-+-------------------+
| Income | | (100,000) | | (110,000) | | 10,000 | | 3,434 |
| (loss) | | | | | | | | |
| before income | | | | | | | | |
| taxes | | | | | | | | |
+---------------------------+-+--------------+-+--------------+-+-------------+-+-------------------+
| Net | | JPY(129,000) | | JPY(130,000) | | JPY1,000 | | JPY(17,992) |
| income | | | | | | | | |
| (loss) | | | | | | | | |
+---------------------------+-+--------------+-+--------------+-+-------------+-+-------------------+
* Based on Japanese GAAP
** Based on U.S. GAAP
Operating revenue should be mostly the same as our previous forecast.
We have revised our operating loss forecast as shown above mainly because of
lower-than-expected provisions for product inventory disposal costs accompanying
the withdrawal from the display business. Consequently, we have revised our
forecast for the loss before income taxes based on expectations of asset
write-downs, and our net loss forecast due to income taxes following an
evaluation of deferred tax assets.
Cautionary Statement with Respect to Forward-Looking Statements
Statements made in this release with respect to our current plans, estimates,
strategies and beliefs, and other statements that are not historical facts are
forward-looking statements about our future performance. These statements are
based on management's assumptions and beliefs in light of the information
currently available to it. We caution that a number of important risks and
uncertainties could cause actual results to differ materially from those
discussed in the forward-looking statements, and therefore you should not place
undue reliance on them. It is not our obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. We disclaim any such obligation. Risks and uncertainties
that might affect us include, but are not limited to: (i) general economic
conditions in our markets, particularly levels of consumer spending; (ii)
exchange rates, particularly between the Japanese yen and the U.S. dollar, the
euro, and other currencies in which we make significant sales or in which our
assets and liabilities are denominated; (iii) our ability to continuously design
and develop highly rated products and services in extremely competitive
markets, which are characterized by continual product launches, rapid
technological development, intense price-based competition, subjective and
changing consumer preferences and other factors; (iv) our ability to
successfully implement our business strategies; (v) our ability to compete, as
well as develop and implement successful sales and distribution strategies, in
light of technological developments in and affecting our businesses; (vi) our
continued ability to devote sufficient resources to research and development,
and capital expenditure; (vii) our ability to continuously enhance our brand
image; (viii) the success of our joint ventures and alliances; (ix) the success
of our restructuring plans; and (x) the outcome of contingencies.
Pioneer Corporation is a leading global manufacturer of consumer- and
business-use electronics products such as audio, video and car electronics. Its
shares are listed on the Tokyo Stock Exchange.
# # # # # #
For further information, please contact:
Investor Relations Department, Corporate Communications Division
Pioneer Corporation, Tokyo
Phone: +81-3-3495-6773 / Fax: +81-3-3495-4301
E-mail: pioneer_ir@post.pioneer.co.jp
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCGIGDSSUDGGCI
Paragon M. C47 (LSE:35SV)
Historical Stock Chart
From Jun 2024 to Jul 2024
Paragon M. C47 (LSE:35SV)
Historical Stock Chart
From Jul 2023 to Jul 2024
