Tokyo, Aug 6, 2009 - (JCN Newswire) - Pioneer Corporation today announced its consolidated first-quarter business results for the period ended June 30, 2009.
Consolidated Financial Highlights (millions of yen)
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Three months ended June 30 2009 2008 %
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Net Sales 95,757 160,966 59.5%
Operating loss (8,756) (6,825) -
Ordinary loss (8,941) (5,517) -
Net loss (4,099) (9,487) -
Net loss per share (Y) (19.99) (46.27)
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Consolidated Business Results
For the first quarter of fiscal 2010, the three months ended June 30, 2009, consolidated net sales decreased 40.5% from the first quarter of fiscal 2009 to JPY 95,757 million (US$997.5 million). This was mainly the result of a decline in sales of car audio products, DVD drives, plasma displays and car navigation systems, which largely reflected the sharp deterioration in consumer spending worldwide and the impact of the yen's appreciation.
Pioneer recorded an operating loss of JPY 8,756 million (US$91.2 million), compared with an operating loss of JPY 6,825 million in the first quarter of fiscal 2009, reflecting the drop in net sales and deterioration in the gross profit margin, despite lower selling, general and administrative expenses, mainly owing to restructuring benefits and the recording of a lump-sum fee income from patents related to plasma displays. The net loss improved from JPY 9,487 million in the first quarter of fiscal 2009 to JPY 4,099 million (US$42.7 million). This improvement mainly reflected the recording of a gain on sales of noncurrent assets such as patents related to plasma displays, and decreased income taxes.
During the first quarter of fiscal 2010, the average value of the Japanese yen appreciated 7.4% against the U.S. dollar and 23.3% against the euro, compared with the first quarter of fiscal 2009.
Car Electronics sales decreased 38.4% year on year to JPY 54,235 million (US$564.9 million) because of lower sales of both car audio products and car navigation systems, mainly due to lackluster auto sales worldwide. In car navigation systems, consumer-market sales declined year on year, due to lower sales in Japan. OEM sales decreased because of lower sales in North America and Japan. In car audio products, consumer-market sales declined, mainly due to lower overseas sales. OEM sales decreased because of lower sales in Japan and North America. Total OEM sales in this segment accounted for approximately 39% of Car Electronics sales, compared with approximately 41% in the first quarter of fiscal 2009.
In terms of geographic sales, sales in Japan decreased 29.4% to JPY 24,630 million (US$256.6 million), and overseas sales declined 44.4% to JPY 29,605 million (US$308.4 million).
This segment recorded an operating loss of JPY 8,693 million (US$90.6 million), compared with operating income of JPY 1,704 million in the first quarter of fiscal 2009. This was mainly due to lower net sales, as well as deterioration in the gross profit margin caused by a decline in production volume and the yen's appreciation, primarily in the car audio products business.
Home Electronics sales decreased 48.2% year on year to JPY 29,705 million (US$309.4 million). Despite increased sales of Blu-ray Disc players due to favorable sales of new models, the decrease in Home Electronics sales largely reflected a drop in DVD drive sales mainly for PC manufacturers, as well as lower overseas sales in the plasma display business, from which Pioneer will withdraw by the end of fiscal 2010.
In terms of geographic sales, sales in Japan increased 17.1% year on year to JPY 7,762 million (US$80.9 million) due to higher sales of Blu-ray Disc drives, while overseas sales decreased 56.7% to JPY 21,943 million (US$228.6 million).
Operating income in this segment was JPY 1,020 million (US$10.6 million) compared with an operating loss of JPY 7,394 million in the first quarter of fiscal 2009. Despite the drop in net sales, the main reasons for this improvement were that in plasma displays there were the recording of a lump-sum fee income from patents, improvement in the gross profit margin, and reduced operating expenses.
In the Others segment, sales decreased 23.9% year on year to JPY 11,817 million (US$123.1 million) due principally to lower sales of factory automation systems, electronics devices and parts, speaker units for cellular phones and organic lightemitting diode displays.
In terms of geographic sales, sales in Japan decreased 20.3% to JPY 8,269 million (US$86.1 million), and overseas sales decreased 31.2% to JPY 3,548 million (US$37.0 million). The operating loss in this segment was JPY 1,615 million (US$16.8 million) compared with JPY 264 million in the first quarter of fiscal 2009. The larger operating loss mainly resulted from the drop in net sales and deterioration in the gross profit margin.
Note: Operating income (loss) in each business segment represents operating income (loss) before elimination of intersegment transactions.
Consolidated Financial Position
Total assets as of June 30, 2009 were JPY 418,236 million (US$4,356.6 million), a decrease of JPY 10,857 million from March 31, 2009, mainly reflecting decreases in inventories, and cash and deposits. Inventories declined JPY 8,393 million from March 31, 2009 to JPY 76,493 million (US$796.8 million), as we pressed ahead with inventory reductions centered on car audio products. Cash and deposits decreased JPY 3,776 million from the previous fiscal year-end to JPY 59,969 million (US$624.7 million).
Total liabilities as of June 30, 2009 were JPY 307,034 million (US$3,198.3 million), down JPY 10,211 million from March 31, 2009. This mainly reflected a decrease of JPY 9,652 million in accrued expenses, chiefly due to the payment of special retirement benefits for the early retirement programs implemented in fiscal 2009.
Total equity was JPY 111,202 million (US$1,158.4 million), a decrease of JPY 646 million. This chiefly reflected a decline of JPY 4,099 million in retained earnings due to the recording of a net loss, despite an increase of JPY 4,012 million in unrealized gain on available-for-sale securities, resulting from a rise in the market value of investment securities compared with March 31, 2009.
Cash Flows
During the first quarter of fiscal 2010, operating activities used net cash of JPY 7,409 million (US$77.2 million). The main factors reducing cash were a loss before income taxes and minority interests of JPY 4,021 million (US$41.9 million); a decrease in accrued expenses of JPY 10,122 million (US$105.4 million), mainly reflecting the payment of special retirement benefits; as well as a decrease in accrued pension and severance costs of JPY 2,758 million (US$28.7 million). These factors outweighed the addback of non-cash expenses, namely depreciation and amortization of JPY 10,487 million (US$109.2 million).
Investing activities provided net cash of JPY 3,342 million (US$34.8 million). This mainly reflected proceeds of JPY 9,045 million (US$94.2 million) from sales of noncurrent assets, such as patents related to plasma displays, despite capital expenditures of JPY 5,890 million (US$61.4 million) mainly in the Car Electronics business. Financing activities provided net cash of JPY 1 million (US$0.01 million), mainly due to a net increase in shortterm borrowings, despite the repayment of long-term debt.
Consequently, cash and cash equivalents at June 30, 2009 were JPY 59,969 million (US$624.7 million), down JPY 3,777 million from March 31, 2009.
Business Forecasts for Fiscal 2010
Consolidated business forecasts for fiscal 2010, ending March 31, 2010, have not been changed from those announced on May 13, 2009, as shown below.
In the first quarter of fiscal 2010, net sales and losses were both better than our plan mainly due to a smaller-than-expected drop in plasma display prices and weakerthan- expected yen exchange rates. However, we have conservatively estimated consumption trends and the competitive environment from the second quarter of fiscal 2010 onward. The average yen-U.S. dollar and yen-euro exchange rates for these consolidated business forecasts are JPY 90 and JPY 115, respectively. The figures below do not include the impact of the optical disc joint venture business with Sharp Corporation.
First half (In millions of yen)
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Forecasts for Results for Percent
fiscal 2010 fiscal 2009 changes
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Net sales 195,000 327,042 -40.4%
Operating loss (32,000) (14,340) -
Ordinary loss (35,000) (13,540) -
Net loss (47,000) (44,071) -
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Full year
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Net sales 420,000 558,837 -24.8%
Operating loss (33,000) (54,529) -
Ordinary loss (37,500) (54,420) -
Net loss (83,000) (130,529) -
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Progress with Restructuring
Pioneer is currently implementing drastic restructuring comprising measures to realign the business portfolio, streamline the business framework of the entire Pioneer group, and improve the Company's financial position.
Regarding business portfolio realignment, in its core Car Electronics business, Pioneer has entered into a memorandum of understanding with Mitsubishi Electric Corporation concerning joint development of car navigation platforms and has begun development work. We are also proceeding with discussions to start a joint venture in October 2009 with Shanghai Automotive Industry Corporation (Group) of China. In the display business, Pioneer plans to completely withdraw from this business after ending plasma TV sales by March 31, 2010, as scheduled. Regarding the optical disc joint venture with Sharp Corporation, Pioneer decided, at a meeting of its Board of Directors held today, to transfer its optical disc business to the new company and preparations are under way to begin operations at the joint venture from October 1, 2009.
Regarding streamlining the business framework of the entire Pioneer group, we are consolidating our current network of production companies around the world. Four companies have already been closed. Going forward, we plan to close two additional companies and downsize the operations of three companies by December 31, 2009. Plans also call for closing three additional companies and downsizing the operations of three more companies by March 31, 2010. Regarding our sales structures in Japan, from October 1, 2009, we plan to integrate domestic sales divisions and companies into two sales companies, one each for the Car Electronics and Home Electronics businesses, in order to raise efficiency. Regarding streamlining overseas sales structures, we plan to implement measures in North America and Europe from the fall to the end of December 2009. We have already completed such measures in other regions. Furthermore, aiming to optimize the efficiency of Headquarters and back office functions, we are planning to conduct organizational changes on October 1, 2009 and we expect to integrate Pioneer's network of five operating bases in Japan into two locations at Kawasaki and Kawagoe by March 31, 2010. With regard to readjustments of personnel levels accompanying these measures, in Japan, we are implementing special early retirement programs with a retirement date of September 30, 2009. Overseas, we plan to implement personnel reductions by March 31, 2010.
Regarding improving the Company's financial position, Pioneer has worked to generate cash mainly through inventory reductions and the sales of noncurrent assets such as patents related to plasma displays. In regard to boosting equity capital, Pioneer has agreed with Honda Motor Co., Ltd. to conduct a JPY 2.5 billion third-party allotment of shares to this company, and discussions are proceeding on the implementation period. Furthermore, Pioneer is currently conducting negotiations on new financial partnerships with potential sponsors, with the aim of raising funds of around JPY 40 billion.
In this manner, restructuring is proceeding largely on schedule. Going forward, we will continue making every effort to complete restructuring by the end of fiscal 2010.
Material Events Regarding Going Concern Assumption
Pioneer's financial position has deteriorated due to a sharp drop in net sales, large losses and significant net cash used in operating activities. As a result, conditions have given rise to material uncertainty about Pioneer's ability to continue its business activities into the future. However, Pioneer believes that this uncertainty can be avoided by steadily implementing the drastic restructuring that is currently under way.
Also, from fiscal 2009, the Company's business performance has triggered breaches of financial covenants stipulated by loan agreements with multiple banks. However, in recognition of the Company's situation as described above, the banks have agreed to maintain their existing loans to Pioneer based on loan agreements.
Furthermore, Pioneer has received loans on an ongoing basis chiefly from its main banks, which have pledged their intention to continue providing financial support to the Company. Pioneer remains committed to improving its performance by implementing restructuring, while working hard to ensure the continued support of the banks. Details of progress with restructuring are provided in the "Progress with Restructuring" shown above.
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 forwardlooking 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.
The U.S. dollar amounts in this release represent translations of Japanese yen, for convenience only, at the rate of JPY 96=US$1.00, the approximate rate prevailing on June 30, 2009.
About Pioneer
Pioneer Corporation, headquartered in Tokyo, is a leading global manufacturer of consumer and business-use electronics products such as audio, video and car electronics. Its shares are traded on the Tokyo Stock Exchange (TSE: 6773). For more information , please visit http://pioneer.jp .
Contact:
Pioneer Corporation, Tokyo
Investor Relations Department,
Corporate Communications Division
Phone: +81-3-3495-6773
Fax: +81-3-3495-4301
E-mail: pioneer_ir@post.pioneer.co.jp
IR Website: http://pioneer.jp/ir-e/
Aug 6, 2009
Source: Pioneer
Pioneer (TSE: 6773) (U.S: PNCOF)
From the Japan Corporate News Network
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