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Wednesday, June 29, 2005
Pioneer Posts Low Profits for 2005
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The fiscal year 2005 ended March 31, 2005, and Pioneer reported that the year was not the easiest one for the Japanese giant. Consolidated operating revenue was Y733.6 billion (US$6,856.5 million), up 4.7% over the previous year, mainly due to increased sales of plasma displays worldwide and DVD recorders overseas, despite decreased sales worldwide of recordable DVD drives and audio products.
As for profit, however, Pioneer posted net loss of Y8.8 billion (US$82.1 million),
compared with net income of Y24.8 billion in the previous year, due primarily to
decreased gross profit margin as a result of intensified price competition of plasma
displays and DVD recorders, impairment losses of the carrying value of certain
production facilities and losses associated with Pioneer's decision not to sell cable
TV set-top boxes in North America.
Net cash provided by operating activities was Y19.9 billion (US$186.4 million),
mainly attributable to the net loss of Y8.8 billion (US$82.1 million) posted this
year,compared with net income of Y24.8 billion for the previous year. Net cash used
in investing activities was Y93.5 billion (US$874.0 million), mainly due to the
acquisition of a plasma display production subsidiary and increased capital
expenditures to expand the capacity to produce plasma displays.
To cope with the situation and to recover profitability quickly, Pioneer plans to
move ahead with cost reduction efforts among the group companies. At the same
time, the company is focusing its resources in the strategic plasma display, DVD and
car electronics businesses.
Pioneer is also considering the possibility to cut a number of models in order to
reduce costs on a global scale.
In the DVD business, although the market for DVD recorders and PC-use recordable
DVD drives is rapidly growing, prices are sharply falling and competition is getting
more intense.
In order to regain competitiveness, Pioneer plans to shorten the development time by
30% by renovating IT infrastructure and enhancing software development efficiency.
Pioneer aims to a twice-a-year launches of new models simultaneously worldwide. By
cutting the manufacturing lead time and reducing inventory through a new production
system which integrates all stages of DVD product manufacturing, from laser pickups
to finished products, at facilities in China, the company will expects to reduce
costs and release attractive products that meet customer demands.
The recordable DVD drives for personal computers generate sales, but competitors
in Taiwan and South Korea are dropping prices aggressively on increasingly
competitive products, so Pioneer cannot expect a return to earlier levels of high
profitability. However, the company seeks to increase its share and maintain profit
margins for these products, as it plans to focus on slim drives for notebook
computers and sell more drives to both the OEM market and the consumer market
worldwide.
In the device business, the Pioneer drive units for DVD recorders, mainly for
electric appliance manufacturers on an OEM basis, but also for Pioneer brand
products, currently command a 30% share of the market. Future plans include doubling
of these sales. As for laser pickups, the key parts for DVD products, Pioneer also
aims to expand sales of both recordable and read-only types.
In the car electronics business, Pioneer plans to expand its car navigation system
business in Europe and North America, while maintaining its car audio product sales
activity in growing markets such as China and Central and South America. |
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