Kawasaki City, Japan — Pioneer Corp. and Onkyo finalized an agreement on merging their home A/V businesses, but new details emerged showing the integration will take place in July rather than March as previously announced.
Separately, Pioneer announced that it posted a net loss in the second quarter and first half of its 2015 fiscal year, which ends next March.
In providing more details about the merger, Pioneer disclosed that its consumer headphone business would be part of the deal, having previously mentioned that the headphone group was being considered for inclusion, said Russ Johnston, Pioneer Americas EVP. DJ headphones will remain with Pioneer’s DJ business, which is being sold off to an investment group.
He also said that:
–the companies haven’t disclosed the time period for which Onkyo has rights to the Pioneer brand in home entertainment and headphones.
–and Pioneer’s home entertainment group will remain, at least for now, a separate business unit within Onkyo with sales and marketing separate from Onkyo, though “synergies are being reviewed daily.”
The integration of the Onkyo and Pioneer home entertainment businesses takes place on July 1, when Onkyo’s home business becomes part of a new Pioneer-Onkyo business unit within Onkyo. Previously, Pioneer had disclosed that it would move its businesses into the unit in March, but Onkyo had not previously revealed a timetable for integrating its home business into the unit, said Johnston.
Pioneer is selling off its home electronics, consumer headphone, and phone operations to Omkyo as part of an effort to concentrate on OEM and aftermarket car audio and electronics.
As part of the Onkyo deal, Pioneer will purchase a 14.95 percent stake in Onkyo, which also sells PC and IT equipment and automotive speakers. Gibson Brands is Onkyo’s second largest shareholder with a 21.5 percent stake, and Otsuki Strategic Holdings is the largest owner with a 27.7 percent stake.
Pioneer previously said the deal would strengthen the two companies’ A/V business and enable Pioneer to concentrate on the automotive market.
In detailing the agreement’s terms, Pioneer disclosed that its combined home entertainment, headphone and phone businesses posted a net loss of 429 million yen ($3.74 million) in the 2012 fiscal year ending March 31, 2012; a 661 million yen net loss in fiscal 2013; and a 2.57 billion yen net loss in fiscal 2014. Pioneer Corp., in contrast, posted 500 million yen in consolidated net income in 2014, though it posted a 2013 net loss of 19.6 billion yen.
Pioneer also disclosed that Onkyo posted a net loss of 3.39 billion yen in 2012, swung to net income of 437 million in 2013, then swung back to a net loss of 459 million yen in 2014.
For its fiscal second quarter, Pioneer Corp. posted a net loss of 345 million yen compared with year-ago income of 5.2 billion yen, but the company’s year-to-date net loss shrank 51 percent to 2.43 billion yen.
Consolidated operating income fell 61.9 percent to 3.1 billion yen for the quarter but was up for the half by 491 percent to 3.37 billion yen.
Consolidated sales fell 3.5 percent to122.6 billion yen in the quarter and 0.2 percent for the first half to 235.9 billion yen.
OEM and aftermarket car electronics sales fell 2.7 percent in the quarter to 86.3 billion yen following a 4.2 percent gain in the first quarter. The segment posted operating profits of 3.6 billion yen, down from the year-ago 6 billion yen.
Home electronics sales fell 14.1 percent to 25.6 billion yen in the quarter following flat growth in the first quarter. The segment swung to a 700 million yen operating profit following a first-quarter operating loss of 1.4 billion yen, but the second-quarter profit was down 70 percent from the year-ago 2.3 billion yen.