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Pioneer Posts Rough Fiscal Year Report

5/13/2008 09:31:00 AM Eastern

Tokyo — Pioneer reported lower operating revenue, operating income and a higher net loss for fiscal 2008, ended March 31, as well as confirming plans for improving profitability.

In its consolidated business results for fiscal 2008, consolidated operating revenue decreased 2.8 percent year-on-year to $7.74 billion, mainly due to lower plasma display and DVD recorder sales, despite higher sales of DVD drives, Blu-ray Disc-related devices, car audio products and car navigation systems.

Operating income decreased 12.7 percent year-on-year to $109.1 million chiefly due to a larger loss in the plasma display business, despite higher earnings in the car electronics business. The net loss was $179.9 million, almost three times as high as the previous year, due mainly to impairment losses of $232.9 million primarily on plasma display production facilities, and higher income taxes following an evaluation of deferred tax assets, despite a gain on sale of all land and buildings at the Tokorozawa plant and some at the Omori plant.

During fiscal 2008, the average value of the Japanese yen appreciated 2.4 percent against the U.S. dollar and depreciated 7.1 percent against the euro, compared with the previous fiscal year.

Car electronics sales increased 4.5 percent year-on-year to $3.74 billion due to higher sales of both car navigation systems and car audio products. In car navigation systems, consumer-market sales were mostly the same as in the previous fiscal year, while OEM sales increased in North America. In car audio products, consumer-market sales decreased in North America due to market contraction, while OEM sales rose in North America. Total OEM sales in this segment accounted for approximately 39 percent of car electronics sales in fiscal 2008, compared with about 36 percent in fiscal 2007.

Operating income in this segment rose 18.3 percent to $261.5 million. This principally reflected lower selling expenses for consumer-market products, such as advertising and sales-promotion expenses, despite higher development expenses in the OEM business.

Home electronics sales decreased 8.8 percent year-on-year to $3.3 billion. The decrease was due to plasma display sales declining because of a drop in sales volume mainly in North America and Europe. Plasma display sales accounted for approximately 40 percent of home electronics sales, compared with approximately 49 percent in the previous fiscal year.

The operating loss in this segment was $179.7 million, slightly higher than the previous fiscal year.

In its plans for improving profitability in its home electronics business, Pioneer reiterated that it will end in-house plasma production by March 2009 and will procure plasma display panels from Panasonic starting in the summer of 2009.

Pioneer said as it “closes plants and downsizes operations,” the company plans to redeploy plasma production personnel to its assembly center in Shinzuoka and to its car electronics business, “where growth is expected,” the company said.

As for its agreement with Sharp Electronics, Pioneer confirmed it will rollout LCD TVs supplied by its partner in Europe by this August, and going forward will produce product that will feature proprietary technology.

Among several personnel moves Pioneer will redeploy about 200 product design engineers from its display business to its car electronics business. It said pay packages for corporate officers will be cut, and it will use more temporary staff and outsource some operations.

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