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D&M Dips Into Red In Q1, Expects H1, Full-Year Profits

7/27/2007 11:47:00 AM Eastern

Kawasaki, Japan — D&M Holdings dipped into the red in its first fiscal quarter ended June but stuck to earlier forecasts calling for first-half and full-year profits and full-year revenues approaching $1 billion.

Revenues surged in the first quarter by 21 percent to $194.6 million at an exchange rate of 118.7 yen to the dollar, largely due to last year’s acquisition of Philips’s OEM speaker business, but the company posted a net-income loss of $2.25 million for the quarter and an operating-profit loss of $2.53 million compared to year-ago first-quarter gains of $1.7 million and $1.3 million, respectively.

D&M ( attributed the first-quarter losses in part to a year-ago one-time acceleration of shipments to Europe before new restrictions went into effect to curb the use of hazardous substances in electronics equipment. The company also cited its decision to push the introduction of new AV receivers to the second quarter from the first so it could add HDMI 1.3 connections throughout the line. An increased R&D investment in the company’s “advanced media project” also contributed to the losses.

The company reaffirmed its earlier first-half forecast calling for net income of $2.3 million and an operating profit of $5.9 million on revenues of $398.8 million. It also forecast full-year net income of $28.3 million and operating profit of $54 million on $914.8 million in revenues.

In its consumer A/V segment, revenue dipped 6 percent to $126.4 million, and the segment’s operating loss grew 34 percent to $6 million. D&M cited the accelerated shipments to Europe last year, the delays in AV receiver introductions, and its stepped-up advanced-media R&D budget.

In the commercial A/V segment, revenues and profits were up for the period. The segment, which includes the newly acquired automotive and home OEM speaker business, saw revenues rise 157 percent to $68.3 million with a 24 percent gain in operating profit to $3.5 million.

The performances of both the consumer and commercial segments met company expectations, D&M said.

“The first quarter for D&M is always a challenge due to imminent model transitions and the light consumer revenues normally seen this time of the year,” said chairman/CEO Eric Evans. “Although the results for the consumer A/V segment were not as strong as last year, they met our expectations.” “Key customer forecasts and a strong backlog of orders” support the company’s first-half and full-year outlooks, he added.

D&M markets the Denon, Marantz, McIntosh Laboratory, Boston Acoustics, Snell Acoustics, D&M Professional, D&M (formerly Philips) Premium Sound Solutions, Denon DJ, ReplayTV and Escient  brands.

The company's consolidated revenue for the previous year was a record $832.6 million, a 12 percent increase over the previous fiscal year. D&M's operating profit was $47.6 million, a gain of 60 percent over the previous year, and net income was up 22 percent to $24 million.


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