Measures for Business Restructuring Plan
May 13 2008 - 7:10AM
UK Regulatory
RNS Number : 2951U
Pioneer Corporation
13 May 2008
For Immediate Release
May 13, 2008
Pioneer Announces Measures for Restructuring the Display Business
and Improving Profitability in Home Electronics
TOKYO - Pioneer Corporation has announced that at a meeting of its Board of Directors held today, the Company approved concrete measures
for restructuring the display business and improving profitability in Home Electronics, as well as medium-term management targets.
1. Measures for Restructuring the Display Business
Pioneer will successively terminate in-house plasma display panel production at its subsidiaries Pioneer Display Products Corporation
(DPC) and Pioneer Plasma Display Corporation (PPD) by March 2009, after completing panel production for models scheduled for release in
2008. With regard to plasma display panel procurement after terminating in-house production, as announced on April 24, 2008, Pioneer has
reached a basic agreement with Matsushita Electric Industrial Co., Ltd. on procuring plasma display panels from Matsushita from the summer
of 2009. Pioneer's proprietary technologies will be adopted by Matsushita as part of the process of supplying plasma display panels to
Pioneer. The two companies plan to cooperate on developing panels befitting Pioneer's commitment to high picture quality and premium-grade
products.
Regarding Pioneer's production facilities after termination of plasma display panel production, the DPC Shizuoka Plant will continue
producing display products as an assembly center and will become a product distribution and inspection facility for the Japanese market.
Meanwhile, the DPC Yamanashi Plant and PPD Kagoshima Plant will be closed after plasma display panel production is terminated. Pioneer is
currently considering ways to utilize these two facilities, including selling them.
As it closes plants and downsizes operations, Pioneer plans to redeploy plasma display panel production personnel to ongoing display
assembly operations at the DPC Shizuoka Plant, the Car Electronics business, where growth is expected, or other businesses in the Pioneer
Group. However, Pioneer will also discuss an incentive-
based early retirement program with labor unions. This is because some employees may be unable to relocate or otherwise be redeployed,
and it may be difficult for the Pioneer Group to absorb affected employees.
Regarding LCD TVs, Pioneer plans to successively roll out Sharp Corporation-supplied LCD TVs starting in Europe in August 2008. Going
forward, Pioneer plans to develop LCD TVs that combine its proprietary technologies with LCD panels supplied by Sharp, for an expanding
number of regions. The two companies are also discussing joint development aimed at boosting development efficiency and combining Sharp's
outstanding liquid crystal technology with Pioneer's technologies for realizing high picture quality.
By carrying out these measures, Pioneer aims to reduce operating expenses in the display business by ¥15 billion in fiscal year 2010,
ending March 31, 2010, compared with fiscal 2008.
2. Measures for Improving Profitability in the Home Electronics Business
In the Home Electronics business, Pioneer will overhaul its development and production structure in displays in step with the
termination of plasma display panel production and reassign personnel to growth businesses in other fields. Specifically, the Company plans
to redeploy approximately 200 of its product design engineers in the display and audio/video product businesses to the Car Electronics
business and professional sound & visual (Pro SV) business, which involves DJ equipment. In addition, the Company plans to implement
measures to reduce fixed costs, including its overseas sales structure.
Also, to reduce selling, general and administrative expenses and other operating expenses in order to ensure improved profitability in
the Home Electronics business, the Company will enter into discussions with labor unions over a planned readjustment of employment levels by
around 300 individuals in administrative and sales divisions in Japan.
At the same time, the Company will cut remuneration for corporate officers and make efforts to reduce spending on external resources
by reviewing the use of temporary staff and other outsourced operations.
The above measures, combined with display business restructuring, are expected to lower costs in the Home Electronics business by ¥23
billion. These measures are expected to have a significant beneficial impact on profitability from fiscal 2010, following implementation in
fiscal 2009. In line with the foregoing, Pioneer expects to book business restructuring expenses of ¥15 billion in fiscal 2009.
3. Medium-term Management Targets
Pioneer has established medium-term management targets of operating revenue of ¥900 billion and operating income of ¥37 billion, on a
consolidated basis, in fiscal 2011, ending March 31, 2011. To achieve these targets, the Company will work to improve its operating results
by implementing measures to enhance corporate value, which were announced on March 7, 2008, while steadily executing the aforementioned
measures for restructuring the display business and improving profitability in the Home Electronics business.
In the Car Electronics business, the Company is targeting operating revenue of ¥450 billion and operating income of ¥26 billion in
fiscal 2011. Also, the Company aims to maintain an operating margin of around 6%.
In the Home Electronics business, the Company is targeting operating revenue of ¥370 billion and operating income of ¥8 billion in
fiscal 2011, while aiming to restore profitability in fiscal 2010.
In addition to the foregoing, Pioneer will work to enhance its corporate value by improving cash flows through such means as
reducing inventories and accounts receivable, and curbing capital expenditures.
Cautionary Statement with Respect to Forward-Looking Statements
Statements made in this release with respect to our current plans, estimates, strategies and beliefs, and other statements that are not
historical facts are forward-looking statements about our future performance. These statements are based on management's assumptions and
beliefs in light of the information currently available to it. We caution that a number of important risks and uncertainties could cause
actual results to differ materially from those discussed in the forward-looking statements, and therefore you should not place undue
reliance on them. It is not our obligation to update or revise any forward-looking statements, whether as a result of new information,
future events or otherwise. We disclaim any such obligation. Risks and uncertainties that might affect us include, but are not limited to,
(i) general economic conditions in our markets, particularly levels of consumer spending; (ii) exchange rates, particularly between the yen
and the U.S. dollar, euro, and other currencies in which we make significant sales or in which our assets and liabilities are denominated; (iii) our ability to continue to design and develop and win
acceptance for our products and services, which are offered in highly competitive markets characterized by continual new product
introductions, rapid developments in technology, severe price competition and subjective and changing consumer preferences; (iv) our ability
to successfully implement our business strategies; (v) our ability to compete, as well as develop and implement successful sales and
distribution strategies, in light of technological developments in and affecting our businesses; (vi) our continued ability to devote
sufficient resources to research and development, and capital expenditures; (vii) our ability to continuously enhance our brand image;
(viii) the success of our joint ventures and alliances; (ix) the success of our business restructuring plans; and (x) the outcome of
contingencies.
Pioneer Corporation is a leading global manufacturer of consumer- and business-use electronics products such as audio, video and car
electronics. Its shares are listed on the Tokyo Stock Exchange.
For further information, please contact:
Investor Relations Department, Corporate Branding and Communications Division
Pioneer Corporation, Tokyo
Phone: +81-3-3495-6773 / Fax: +81-3-3495-4301
E-mail: pioneer_ir@post.pioneer.co.jp
IR Website: http://pioneer.jp/ir-e/
This information is provided by RNS
The company news service from the London Stock Exchange
END
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