JVC Group Loss Balloons, Shuts TV Factories

By Greg Tarr -- TWICE, 4/25/2008 8:35:00 AM

Tokyo — Victor Co. of Japan, parent of JVC America, disclosed Friday it will stop making LCD TVs in Japan and Scotland and shift production to other sources in a bid to raise profitability, according to reports from Japan.

Contrary to earlier reports, the company said Friday it will not drop sales of televisions in Japan, altogether, but will no longer sell mass-market LCD TV models as it focuses on higher-profit 42-inch and larger SKUs, reports here said.

The company reportedly said casting off the money-losing TV assembly operations should help it break even in fiscal 2009. It plans to stop making LCD TVs at its plant in Yokosuka, Kanagawa Prefecture, southwest of Tokyo, as early as this summer. All production will be moved to its plant in Thailand, according to Japanese reports.

The company reportedly said LCD TV shipments for the current fiscal year to March 2009 should reach 35,000 units, down from about 300,000 units in the previous year.

In another statement released Friday the company said it also plans to end TV production at its JVC Manufacturing U.K. factory in East Kilbride, Scotland, and will instead outsource the work to consignment production by an electronic manufacturing service (EMS) company in Poland at the end of July 2008. The company had manufactured cathode-ray tube (CRT) televisions, LCD TV and related products primarily for the U.K. and other European markets.

In its report for the fiscal year ended March 2008 JVC said, “Japan domestic sales in the consumer electronics segment declined year-on-year, as not only the home storage business including DVD recorders contracted, but also mainstay camcorders, LCD televisions and audio products all fought uphill battles due to heightened market competition. Sales in this segment outside of Japan also fell short of the previous fiscal year’s level. In the Americas, on a local currency basis, A/V accessories such as headphones registered substantial growth on strong sales, and sales of LCD televisions were firm. However, a contracting market for CRT televisions and lower sales of D-ILA rear-projection televisions led to an overall decline in this region.”

JVC said its group net loss for fiscal 2008 rose to $455 million (47,521 million yen) from last year’s $75 million (7,891 million yen), due mainly to costs from closing unprofitable operations. It suffered a net loss for the fourth straight year.

Sales were down 11.3 percent to $6.3 billion (658,449) million yen.

But the company reported an operating profit of $31 million (3,262 million yen) following a loss of $54 million (5,656 million yen).

JVC attributed the turnaround in operating profit to changes outlined in its 2007 action plan, and support from three profitable business lines, camcorders, car electronics, and accessories. It also saw increased profit from the previous year in its professional electronics and entertainment unit.

For the fiscal year to March, JVC said it expects to break even on a net basis with sales of $5.7 billion (595 billion yen), down 9.6 percent.