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02 15-14 pioneer results-q3-1

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  • 1. Pioneer Corporation Business Results for Third Quarter of Fiscal 2014 Susumu Kotani, President and CEO February 12, 2014
  • 2. 2 Main Points of Today’s Presentation 1. Business Results for Third Quarter of FY2014:  Operating income in the third quarter exceeded our projection. On a year-on-year basis, net sales increased and operating income returned to profitability. 2. Business Forecasts for FY2014:  Forecasts for the full year (net sales of 505.0 billion yen, operating income of 10.0 billion yen, and net income of 0.5 billion yen) are unchanged.
  • 3. 3 Today’s Agenda 1. Business Results for Third Quarter of FY2014 2. Business Forecasts for FY2014 Cautionary Statement with Respect to Forward-Looking Statements Statements made in this presentation 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, and levels of demand in the major industrial sectors which we serve; (ii) exchange rates, particularly between the Japanese yen and the euro, the U.S. dollar, and other currencies in which we make significant sales or in which our assets and liabilities are denominated; (iii) our ability to continuously design and develop and win acceptance for our products in extremely competitive markets; (iv) our ability to successfully implement our business strategies; (v) the success of our joint ventures, alliances and other business relationships with third parties; (vi) our ability to access funding; (vii) our continued ability to devote sufficient resources to research and development, and capital expenditure; (viii) our ability to ensure the quality of our products; (ix) conditions in which we are able to continuously procure key parts essential to our manufacturing operations; and (x) the outcome of contingencies.
  • 4. 4 1. Business Results for Third Quarter of FY2014
  • 5. 5 Consolidated Results for Third Quarter & Nine Months of FY2014 (billion yen) Third Quarter FY2014 Prior Year 126.3 104.5 Operating Income/Loss 2.8 -1.8 Ordinary Loss -0.1 Net Loss -1.7 Net Sales Nine Months % to Prior Year 120.8% FY2014 Prior Year % to Prior Year 362.6 329.1 110.2% - 3.3 1.4 240.5% -2.9 - -2.1 -2.1 - -2.3 - -6.7 -9.8 (yen) Average Currency Rate 1 US$ 100.46 81.17 +19.2% 99.39 80.00 +19.5% 1 Euro 136.69 105.25 +23.0% 132.23 102.17 +22.7% (yen) Net Loss per Share -4.76 -7.03 +2.27 -19.01 -30.39 +11.38 ROE -8.2% -11.7% +3.5% -10.9% -15.8% +4.9% Book-value per Share 238.46 249.53 -11.07 ROA -2.1% -2.9% +0.8% -2.7% -4.1% +1.4%
  • 6. 6 Operating Income/Loss Structure Breakdown for 3Q, Compared to FY13/3Q (billion yen) Higher Profit Due to Increase in Net Sales -1.8 FY13/3Q Operating Loss Improvement in Cost of Sales Ratio Impact of Currency Exchange Increase in SG&A +1.7 +0.5 -0.6 -0.4 Increase of 4.5 billion yen Reduction of Fixed Costs through Restructuring Measures +3.4 +2.8 FY14/3Q Operating Income
  • 7. 7 Quarterly Net Sales & Operating Income: Car Electronics (billion yen) < Net Sales > OEM Ratio to Net Sales: 54% (FY13/3Q: 52%) % to Prior Year Increase Factors 86.2 126% (Japan 119%, Overseas 131%) OEM car audio products, consumermarket car audio products, OEM car navigation systems, and consumermarket car navigation systems Net Sales 68.6 < Operating Income > 36.3 Year-on-Year Positive Factors Impact of currency exchange (-1.1 billion yen), and increase in SG&A (-0.2 billion yen) 49.8 Overseas 38.1 Main products are: Car navigation systems, Car stereos, Car AV systems, and Car speakers. Operating Income 2.7 0.6 FY13/3Q Higher profit due to increase in net sales (+1.8 billion yen), and improvement in cost of sales ratio (+1.7 billion yen) Negative Factors Japan 30.5 Increase of 2.1 billion yen FY14/3Q Note : Operating income by segment represents figures prior to elimination of transactions among segments.
  • 8. 8 Quarterly Net Sales & Operating Income/Loss: Home Electronics (billion yen) < Net Sales > % to Prior Year Increase Factors 24.8 Optical disc drive-related products < Operating Income/Loss > 8.0 Year-on-Year Improvement of 2.1 billion yen Positive Factors Decrease in SG&A (+1.6 billion yen), impact of currency exchange (+0.5 billion yen), and higher profit due to increase in net sales (+0.1 billion yen) Negative Factor Japan 6.9 Worsening of cost of sales ratio (-0.1 billion yen) 21.4 Overseas 17.9 Operating Income/Loss FY13/3Q DJ equipment, and equipment for cable-TV systems Decrease Factor 29.4 Net Sales 118% (Japan 116%, Overseas 119%) -1.7 0.4 FY14/3Q Main products are: Audio systems, Audio components, DJ equipment, Equipment for cable-TV systems, Blu-ray Disc players, Blu-ray Disc drives, DVD players, DVD drives, and AV accessories. Note : Operating income/loss by segment represents figures prior to elimination of transactions among segments.
  • 9. 9 Quarterly Net Sales & Operating Loss: Others < Net Sales > (billion yen) Electronic devices and parts Decrease Factors 11.1 97% (Japan 98%, Overseas 94%) Increase Factor Net Sales % to Prior Year Factory automation systems, and EMS 10.7 < Operating Loss > Year-on-Year Positive Factor 7.2 Overseas Operating 3.7 -0.8 Improvement in cost of sales ratio (+0.6 billion yen) Increase in SG&A (-0.2 billion yen), and lower profit due to decrease in net sales (-0.1 billion yen) 3.5 Loss FY13/3Q Improvement of 0.4 billion yen Negative Factors Japan 7.4 FY14/3Q -0.4 Main products and services are: Factory automation systems, Speaker units, Electronic devices and parts, Organic light-emitting diode displays, Telephones, Business-use AV systems, Electronic manufacturing services (EMS), Map software, and Licensing of patents related to laser optical disc technologies. Note : Operating loss by segment represents figures prior to elimination of transactions among segments.
  • 10. 10 Quarterly Net Sales by Geographic Segment Japan North America 80 30 FY14/3Q compared to prior year Yen basis: 119% Local currency basis: 97% FY14/3Q compared to prior year 115% 60 Increase Factors OEM car navigation systems, OEM car audio products, optical disc drive-related products, and equipment for cable-TV systems 40 20 25.2 51.6 20 (billion yen) 44.8 Decrease Factor Factory automation systems 0 10 21.1 Increase Factors Car audio products both in consumer market and OEM, audio components, and DJ equipment Decrease Factor Map software 0 FY13/3Q 30 FY14/3Q 40 Europe FY14/3Q compared to prior year Yen basis: 119% Local currency basis: 93% FY13/3Q FY14/3Q Other Regions FY14/3Q compared to prior year Yen basis: 134% Local currency basis: 113% 30 20 14.7 20 Decrease Factor DVD players 17.5 10 Increase Factors Consumer-market car audio products, DJ equipment, AV systems, and audio components 10 32.0 23.8 Decrease Factor Optical disc drive-related products 0 0 FY13/3Q FY14/3Q Increase Factors Car audio products both in consumer market and OEM, electronic devices and parts, and DJ equipment FY13/3Q FY14/3Q
  • 11. 11 Third Quarter of FY2014: Summary of Consolidated Statements of Cash Flows Third Quarter FY2014 Income (loss) before income taxes and minority interests (billion yen) Nine Months FY2013 FY2014 FY2013 -7.5 18.8 0.7 0.9 Decrease in provision for restructuring costs - - -6.2 - Loss (gain) on impairment of investment securities - -1.1 - 4.7 6.0 9.1 2.5 15.0 Decrease (increase) in inventories -5.2 -6.7 -3.1 -18.5 Increase (decrease) in trade payables -0.3 -4.6 20.7 -12.6 Increase (decrease) in accrued expenses 1.2 -7.2 -0.2 -6.5 Others 1.6 2.9 -4.1 4.1 Cash flows from operating activities 9.5 -2.9 25.9 -1.6 Cash flows from investing activities -6.3 -5.7 -18.6 -24.0 Cash flows from financing activities -0.4 5.1 6.6 8.7 Foreign currency translation adjustments on cash and cash equivalents 1.5 2.1 2.0 0.6 Free cash flows 3.2 -8.6 7.3 -25.7 Net increase/decrease in cash and cash equivalents 4.3 -1.4 16.0 -16.4 36.9 29.5 -57.9 -67.2 Decrease (increase) in trade receivables Balance of cash and cash equivalents Net cash balance Cash Flows from Operating Activities Cash Flows from Investing Activities Free Cash Flows 4.7 -8.6 FY13/3Q -8.4 3.2 -0.5 -6.3 -0.1 9.5 0.2 -5.8 Increase (decrease) in accrued pension and severance costs 5.3 18.9 -6.5 6.5 11.2 6.4 -11.2 Depreciation and amortization 2.8 -3.3 -5.7 -1.8 -2.9 -0.4 FY13/4Q FY14/1Q FY14/2Q FY14/3Q
  • 12. 12 Third Quarter of FY2014: Inventories (billion yen) 76 64 56 88.3 '12/12 60 (turnover days) 53 76.5 78.1 75.6 '13/03 '13/06 '13/09 84.7 '13/12
  • 13. 13 Nine Months of FY2014 : Net Sales & Operating Income/Loss by Segment (billion yen) Car Electronics Home Electronics 25 50 20 100 300 Others 10 253.7 Net Sales 78.6 Net Sales 227.6 Net Sales 69.0 32.5 21.7 200 60 109.0 30.3 15 30 Japan 6 22.0 Japan 109.2 Japan 19.6 10 Operating Income 56.9 Overseas 100 20 19.1 47.1 5 2 10 Overseas Overseas 8.7 Operating Loss 144.7 118.4 12.9 0 0 5.6 0 -0.6 0 FY13 1-3Q FY14 1-3Q 11.2 0 -1.5 -4.7 0 Operating Loss -1.4 -5 -10 -20 FY13 1-3Q FY14 1-3Q Note : Operating income/loss by segment represents figures prior to elimination of transactions among segments. -2 FY13 1-3Q FY14 1-3Q
  • 14. 14 2. Business Forecasts for FY2014
  • 15. 15 Consolidated Business Forecasts for FY2014 (billion yen) Prior-year Results % to Prior Year 505.0 451.8 111.8% Operating Income 10.0 6.0 166.8% Ordinary Income 5.0 0.8 615.8% 0.5 -19.6 - Forecasts Net Sales Net Income/Loss (yen) Forecasts 1 US$ 100 135 212.0 292.0 293.0 201.7 107.14 Prior-year Results 213.0 451.8 83.10 1 Euro 505.0 Japan Prior-year Results Forecasts Currency Rate 505.0 Net Sales Net Income/Loss per Share 1.42 -60.90 To Prior Year Overseas 250.1 Operating Income +62.32 10.0 10.0 6.0 ROE Book-value per Share ROA 0.6% -24.4% +25.0% 217.17 237.97 -20.80 0.2% -6.2% +6.4% FY13 Results FY14 Previous Forecasts FY14 Current Forecasts Note : In case of 1 yen depreciation against US$ and euro, remaining 3 months impact on: Net sales: US$: 620 million yen / euro: 130 million yen; Operating income: US$: -160 million yen / euro: 60 million yen.
  • 16. 16 To Achieve Fourth Quarter Projections  Fourth quarter projections: net sales of 142.4 billion yen and operating income of 6.7 billion yen (+) - Increased Car Electronics sales, reflecting special demand before the April 2014 consumption tax increase in Japan, and solid sales of high-margin consumer-market car audio products, mainly in emerging markets - Increased sales of high-margin DJ equipment from release of new products - Reduction of fixed costs through restructuring (-) - Weak demand for optical disc drive-related products from effect of market contraction
  • 17. 17 Operating Income Structure Breakdown for 4Q, Compared to FY13/4Q (billion yen) Higher Profit Due to Increase in Net Sales +4.6 FY13/4Q Operating Income Result +3.0 Improvement in Cost of Sales Ratio +2.7 Impact of Currency Exchange Increase in SG&A Reduction of Fixed Costs through Restructuring Measures -6.8 +3.6 -0.5 Increase of 2.1 billion yen +6.7 FY14/4Q Operating Income Forecast
  • 18. 18 Operating Income Structure Breakdown for 4Q, Compared to FY14/3Q (billion yen) Higher Profit Due to Increase in Net Sales Improvement in Cost of Sales Ratio +3.6 +2.7 +2.8 FY14/3Q Operating Income Result Impact of Currency Exchange Increase in SG&A Reduction of Fixed Costs through Restructuring Measures -2.6 +0.2 -0.0 Increase of 3.9 billion yen +6.7 FY14/4Q Operating Income Forecast
  • 19. 19 Forecasts for FY2014: Car Electronics (billion yen) < Net Sales > OEM Ratio to Net Sales: 54% (FY13: 51%) % to Prior Year 352.0 113% (Japan 105%, Overseas 119%) Increase Factors 352.0 Net Sales OEM car navigation systems, and car audio products both in OEM and consumer market 312.6 < Operating Income > 152.0 Year-on-Year Higher profit due to increase in net sales (+1.9 billion yen), and improvement in cost of sales ratio (+0.8 billion yen) Negative Factors Japan Increase of 0.2 billion yen Positive Factors 153.0 Increase in SG&A (-1.3 billion yen), and impact of currency exchange (-1.3 billion yen) 145.0 Operating Income Overseas Restructuring Effect 199.0 < Shipment to Consumer Market > FY13 Results 200.0 167.6 9.8 10.0 10.0 (5.0) Car navigation systems Car CD players FY13 Results FY14 Previous Forecasts (thousand units) FY14 Current Forecasts Note : Operating income by segment represents figures prior to elimination of transactions among segments. FY14 Current Forecasts 904 835 8,043 8,150
  • 20. 20 Forecasts for FY2014: Home Electronics (billion yen) < Net Sales > % to Prior Year Increase Factors Net Sales 109.0 95.9 DJ equipment, equipment for cable-TV systems, and home AV products Decrease Factor 109.0 114% (Japan 106%, Overseas 117%) Optical disc drive-related products < Operating Income/Loss > 32.2 Year-on-Year Improvement in cost of sales ratio (+2.6 billion yen), and impact of currency exchange (+1.9 billion yen) Negative Factors Japan Improvement of 3.8 billion yen Positive Factors 33.3 Lower profit due to decrease in net sales (-0.6 billion yen), and increase in SG&A (-0.1 billion yen) 30.5 Overseas 76.8 75.7 Restructuring Effect 65.4 Operating Income/Loss 1.0 FY13 Results -2.8 FY14 Previous Forecasts 1.0 (3.0) FY14 Current Forecasts Note : Operating income/loss by segment represents figures prior to elimination of transactions among segments.
  • 21. 21 Forecasts for FY2014: Others (billion yen) < Net Sales > % to Prior Year 102% (Japan 106%, Overseas 95%) Increase Factors Electronic devices and parts, and speaker units Decrease Factors Factory automation systems, and EMS Net Sales 44.0 44.0 43.3 < Operating Loss > Year-on-Year Positive Factor Japan Electronic devices and parts Negative Factors 26.7 Worsening of 0.1 billion yen Factory automation systems, and map software 27.8 26.3 Restructuring Effect Overseas 17.1 Operating Loss -0.9 FY13 Results 17.3 16.2 (1.0) -1.0 FY14 Previous Forecasts -1.0 FY14 Current Forecasts Note : Operating loss by segment represents figures prior to elimination of transactions among segments.
  • 22. 22 Forecasts for FY2014: Net Sales by Geographic Segment Japan North America 300 FY14 compared to prior year 105% Increase Factors OEM car navigation systems, OEM car audio products, and equipment for cable-TV systems 200 100 212.0 201.7 FY14 compared to prior year Yen basis: 112% Local currency basis : 94% 100 100.0 50 89.7 Decrease Factors Consumer-market car navigation systems, and optical disc drive-related products Increase Factors Car audio products both in consumer market and OEM, OEM car navigation systems, and DJ equipment Decrease Factor Home AV products 0 0 FY13 Results 80 (billion yen) FY13 Results FY14 Current Forecasts Europe FY14 compared to prior year Yen basis: 120% Local currency basis: 100% 150 FY14 Current Forecasts Other Regions FY14 compared to prior year Yen basis: 120% Local currency basis : 104% 60 40 65.5 54.4 Increase Factors Car audio products both in consumer market and OEM, DJ equipment, and home AV products 100 127.5 50 106.0 Decrease Factor Not applicable 20 Decrease Factor Optical disc drive-related products 0 0 FY13 Results FY14 Current Forecasts Increase Factors Car audio products both in consumer market and OEM, OEM car navigation systems, DJ equipment, and home AV products FY13 Results FY14 Current Forecasts
  • 23. 23 Forecasts for FY2014: Inventories, R&D Expenses, Capital Expenditures, Depreciation & Amortization (billion yen) Inventories 43 R&D Expenses 47 50 56 44 (turnover days) (% to net sales) 8.2 7.2 7.9 7.5 5.9 55.1 59.6 FY10 Result FY11 Result 66.9 FY12 Result 76.5 FY13 Result 70.0 FY14 Current Forecast Capital Expenditures 23.8 22.1 24.8 FY10 Result FY11 Result FY12 Result 36.0 FY10 Result 30.0 33.0 34.6 33.7 FY11 Result FY12 Result FY13 Result (19.4) FY14 Current Forecast (Nine-month result) Depreciation and Amortization 35.0 30.0 39.3 (19.7) FY13 Result FY14 Current Forecast (Nine-month result) FY10 Result 27.0 29.8 24.6 25.4 (18.9) FY11 Result FY12 Result FY13 Result FY14 Current Forecast (Nine-month result)
  • 24. 24 Forecasts for FY2014: Cash Flows and Financial Data 【Cash Flows】 (billion yen) FY2014 Previous Forecasts FY2013 Results Cash Flows from Operating Activities Cash Flows from Investing Activities 1.2 34.0 29.0 -35.2 -31.5 -25.5 7.0 4.5 -0.5 -34.1 2.5 3.5 Cash Flows from Financing Activities Free Cash Flows FY2014 Current Forecasts 【Financial Data】 FY2014 Previous Forecasts FY2013 Results FY2014 Current Forecasts Equity 81.6 79.0 85.0 Equity Ratio (%) 25% 23% 24% Net Debt 74.2 62.0 61.0 1.3 1.2 1.1 22.1 30.0 27.0 D/E Ratio (times) Cash and Deposits Notes: 1. “Cash Flows from Investing Activities” and “Cash and Deposits” include time deposit over three months. 2. Equity in FY2014 includes the anticipated recording of unrecognized pension obligations based on accounting standards for retirement benefits. 3. D/E Ratio = Debt ÷ (Equity – Minority Interests)

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