Tokyo —D&M Holdings posted a 12.1 percent revenue gain to a record $1.09 billion and a 6 percent operating-profit gain to a record $59.4 million in the 2007 fiscal year ending March 31, but a provision for a preliminary accounting opinion by a Japan tax authority drove down net income by 42.8 percent to $16.2 million, the company reported.
D&M, owner of multiple consumer and commercial A/V brands, put the one-time bottom-line impact of the accounting opinion at $13.5 million, including penalties, but the company said it “intends to oppose their [Tokyo Regional Taxation Bureau] opinion to the maximum extent possible.” Under the interim opinion, certain tax losses that occurred in a subsidiary before the merger of Denon and Marntz in 2002 could not be transferred to parent D&M.
D&M’s commercial A/V division drove the rise in revenues and operating profit in the fiscal year, the company said. Consumer A/V sales fell 3.5 percent to $765.3 million, mainly because DVD player sales fell in anticipation of the company’s fourth-quarter release of Blu-ray players, the company contended. The segment’s operating profits dropped 5.9 percent to $37.9 million for the full year but, because delayed products began to ship, operating profits were up 12.3 percent for the second half of the fiscal year.
Revenues in commercial A/V sales were up 82 percent to $320.6 million, and operating profits were up 36.5 percent to $21.4 million, but the gains were due primarily to the inclusion of automotive OEM autosound supplier Premium Sound Solutions for the full year and the inclusion of Calrec Audio, a supplier of audio broadcasting equipment, for the second half, the company said. Both brands are recent acquisitions.
Fiscal 2007 highlights, D&M said, include:
- an 18 percent gain in fiscal 2007 sales of McIntosh consumer products because of increased international marketing and “strong U.S. sales”;
- a fiscal fourth-quarter agreement to to open a Russian office to sell Denon consumer products to dealers; and
- a 53 percent gain in Latin American sales for all brands combined.
Whatever the outcome of the tax appeal, D&M’s fiscal 2007 performance marks the sixth consecutive year since D&M’s March 2002 founding that the company posted an operating profit. The company also posted net income for every year but fiscal 2003. In fiscal 2006, revenues rose 12 percent, operating profit rose 60 percent, and net income rose 22 percent.
The monetary conversion rate used in this story is 103.2 yen to $1.