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Pioneer Reports 28% Fiscal Year Net Loss

5/13/2009 11:09:00 AM Eastern

Tokyo — Pioneer reported a higher net loss and a 27.8 percent drop in revenue in its fiscal year, and reiterated plans to revamp its car and home electronics businesses in the coming 12 months.

Pioneer reported a net loss of $1.33 billion (130.529 million yen), compared with a net loss of 19,040 million yen in the previous fiscal year. Its operating loss was $556.4 million (54,529 million yen), compared with an operating income of 9,216 million yen in the prior year.

Consolidated operating revenue was down 27.8 percent, compared with the prior year of $5.7 billion.

Car electronics operating revenue decreased 22.0 percent year on year to $2.98 billion because of lower sales of both car audio products and car navigation systems, partly due to lackluster auto sales worldwide, Pioneer said.

In car navigation systems, consumer-market sales declined year on year, mainly due to lower sales in North America, Japan and Europe. In car audio products, consumer-market sales decreased, mainly because of lower overseas sales. Total OEM sales in this segment accounted for approximately 41 percent of car electronics operating revenue in fiscal 2009, compared with approximately 39 percent in fiscal 2008.

Car electronics recorded an operating loss of $125.9 million (12,337 million yen) in fiscal 2009, compared with operating income of 26,101 million yen in fiscal 2008.

Home electronics operating revenue decreased 36.5 percent to $2.14 billion year on year. This was largely as a result of lower sales of plasma displays and DVD drives. Display product sales accounted for approximately 38 percent of home electronics’ operating revenue in fiscal 2009, compared with approximately 40 percent in fiscal 2008.

This segment recorded an operating loss of $394.1 million (38,622 million yen) compared with an operating loss of 17,921 million yen in the previous fiscal year. This was mainly due to lower sales and deterioration in the gross profit margin chiefly in plasma displays.

In its financial statement Pioneer reiterated changes in its business and partnerships it has discussed in the past few months:

  • Pioneer’s restructuring will involve layoffs of around 5,800 regular employees and about 4,000 temporary and contract employees compared with its Dec. 31, 2008, level. Plans call for the overhaul of “organizations and structures for sales” and a streamlined R&D operation that matches its new product goals.

  • Car electronics will be positioned as a core business and will enter new markets with “strategic alliances” specifically with Mitsubishi Electric Corporation to jointly develop hardware and software for use in car navigation systems and car A/V products.

  • Pioneer will develop the home electronics business centered on home A/V products, DJ equipment and cable TV set-top boxes. Pioneer will withdraw from the display business after ending plasma TV sales during fiscal 2010. In the optical disc business, Pioneer will form a joint venture with Sharp “with the aim of restoring this business to profitability by taking advantage of the strengths of both companies. We are currently discussing the details of the joint venture, which we plan to establish by Oct. 1.”

  • Pioneer mentioned Honda Motor Company’s investment of $25.8 million of equity capital April 28 and said it “continues to examine other possible financial partnerships.”

With all the changes in store for Pioneer operations set for fiscal 2010, the company projected a smaller company with lower sales and about the same sized net loss as fiscal 2009 due to restructuring expenses and market conditions, but projects a return to profitability in fiscal 2011.

Pioneer said the U.S. dollar amounts in this report represent translations of the Japanese yen at a rate of 98 yen to the dollar.

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