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Pioneer Announces Business Results for 2Q Fiscal 2012

November 9, 2011

Tokyo, Nov 9, 2011 – (JCN Newswire) – Pioneer Corporation today announced its consolidated second-quarter and six-month business results for the period ended September 30, 2011.

Consolidated Financial Highlights

                     (In millions of yen except per share information)
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3 mos ended Sept 30                2011           2010      Change
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Net sales                       115,602         116,833       -1.1%
Operating income                  5,050           4,301      +17.4%
Ordinary income                   3,424           3,769       -9.2%
Net income                        1,212           7,056      -82.8%
Net income p/share                 3.77           21.98
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6 mos ended Sept 30               2011            2010      Change
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Net sales                       213,729         226,681       -5.7%
Operating income                  7,002           6,669       +5.0%
Ordinary income                   5,071           5,454       -7.0%
Net income                        1,505           7,654      -80.3%
Net income p/share                 4.69           23.84
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Consolidated Business Results

For the second quarter of fiscal 2012, the three months ended September 30, 2011, consolidated net sales declined 1.1% from the second quarter of fiscal 2011, to 115,602 million yen. Although car navigation systems showed strong sales in Japan, the Japanese yen’s appreciation against the U.S. dollar, combined with lower sales of optical disc drive-related products and a decline in car audio sales, mainly at the OEM business as a result of the Great East Japan Earthquake, resulted in an overall decline.

Although gross profit decreased as a result of a decrease in net sales, Pioneer recorded a 17.4% increase in operating income from the second quarter of fiscal 2011, to 5,050 million yen, thanks to reductions in selling, general and administrative (SG&A) expenses. Net income declined 82.8%, to 1,212 million yen. Net income in the second quarter of fiscal 2011 included a gain on the sale of the Company’s former Head Office and other assets.

During the second quarter of fiscal 2012, the average value of the Japanese yen appreciated 10.3% against the U.S. dollar, and was almost unchanged against the euro, compared with the second quarter of fiscal 2011.

Car Electronics

Car Electronics sales increased 10.8% year on year, to 70,805 million yen, despite the negative impact of the Japanese yen’s appreciation. In car navigation systems, consumer-market sales rose, due to very strong sales in Japan. OEM sales grew as well, because of an increase in dealer option sales in Japan. In car audio products, consumer market sales declined overall despite an increase in Europe. This drop in sales reflected a decline in Central and South America due to a delay in the introduction of new models as a result of the earthquake. OEM sales also declined, on lower sales in China and North America, from lower OEM orders owing to the earthquake. OEM sales accounted for 42% of total Car Electronics sales, compared with 45% in the second quarter of fiscal 2011.

By geographic region, sales in Japan increased 32.2%, to 36,591 million yen, while
overseas sales declined 5.6%, to 34,214 million yen.

Operating income in this segment declined 1.9% due to an increase in SG&A expenses, combined with the effects of the earthquake, while gross profit rose, in line with an increase in sales, to 3,613 million yen.

Home Electronics

Home Electronics sales declined 17.5% year on year, to 33,520 million yen. Although sales of AV systems rose, the decline reflected a drop in sales of optical disc drive-related products. This drop was the result of a decrease in sales of these products for PCs, in addition to the slowing down of the special demand for these products for AV equipment associated with the shift to digital terrestrial broadcasting in Japan in July 2011.

By geographic region, sales in Japan declined 13.0%, to 16,997 million yen, and overseas sales declined 21.7%, to 16,523 million yen.

Operating income in this segment grew 2.3 times compared with the second quarter of fiscal 2011, to 1,619 million yen, as reductions in SG&A expenses more than offset the decline in sales.

Others

In the Others segment, sales declined 8.2% year on year, to 11,277 million yen, mainly from lower sales of electronic devices and parts and of speaker units for cellular phones, which more than offset higher sales of factory automation systems.

By geographic region, sales in Japan declined 7.9%, to 7,112 million yen, and overseas sales declined 8.6%, to 4,165 million yen.

Operating income declined 83.1%, to 143 million yen, owing to lower sales and a
weaker gross profit margin, despite a reduction in SG&A expenses.

For the first half of fiscal 2012, the six months ended September 30, 2011, consolidated net sales declined 5.7% year on year, to 213,729 million yen. Although sales of car navigation systems were strong in Japan, the Japanese yen’s appreciation against the U.S. dollar, combined with a decline in car audio sales, mainly at the OEM business as a result of the Great East Japan Earthquake, and lower sales of optical disc drive-related products, resulted in an overall decline.

Although net sales decreased, Pioneer recorded a 5.0% increase in operating income, to 7,002 million yen, thanks to an improvement in gross profit margin and reductions in SG&A expenses. However, net income declined 80.3%, to 1,505 million yen. Net income in the first half of fiscal 2011 included a gain on the sale of the Company’s former Head Office and other assets.

During the first half of fiscal 2012, the average value of the Japanese yen appreciated 11.4% against the U.S. dollar, and was almost unchanged against the euro, compared with the first half of fiscal 2011.

Note: Operating income in each business segment represents operating income before elimination of intersegment transactions.

Consolidated Financial Position

Total assets as of September 30, 2011 were 306,645 million yen, a decrease of 3,067 million yen from March 31, 2011. This decrease mainly reflected decreases in property, plant and equipment, trade receivables and investment securities, despite increases in cash and deposits and inventories. Cash and deposits grew 6,756 million yen, to 54,322 million yen. Inventories increased 4,474 million yen, to 64,090 million yen, reflecting inventory buildups based on third-quarter sales targets. Property, plant and equipment decreased 5,599 million yen, to 61,805 million yen, as a result of factors including restrained capital expenditures and sales of idle assets. The 4,395 million yen decrease in trade receivables, to 60,852 million yen, was primarily from the effect of unfavorable foreign exchange rate movements. Investment securities decreased 1,932 million yen, to 10,201 million yen, due to declines in the market value of equity holdings.

Total liabilities as of September 30, 2011 were 225,125 million yen, a 3,867 million yen increase from March 31, 2011, primarily reflecting a 6,558 million yen increase in borrowings as a result of the new term loan agreement with banks to facilitate flexibility in financing by securing cash on hand, as well as to utilize the funds for our business growth.

Total equity was 81,520 million yen, a decrease of 6,934 million yen from March 31, 2011, despite the recording of 1,505 million yen in net income. The decrease resulted from a 7,122 million yen reduction in foreign currency translation adjustments due to the Japanese yen’s appreciation, as well as a 1,912 million yen decrease in unrealized gain on available-for-sale securities, mainly because of a decline in the market value of equity holdings.

Cash Flows

During the first half of fiscal 2012, operating activities provided net cash of 11,055 million yen. The main items generating cash were a 12,235 million yen addback of non-cash expenses for depreciation and amortization and a 4,408 million yen increase in trade payables, which more than offset an 8,573 yen increase in inventories. Investing activities used net cash of 10,104 million yen, mainly for new purchases of noncurrent assets. Financing activities provided 6,518 million yen of net cash, primarily from an increase in borrowings. In addition, cash and cash equivalents denominated in foreign currencies declined 1,809 million yen when converted to Japanese yen, mainly reflecting the yen’s appreciation against the U.S. dollar.

As a result, cash and cash equivalents as of September 30, 2011 totaled 53,226 million yen, marking a 5,660 million yen increase from March 31, 2011.

Business Forecasts for Fiscal 2012

Our two production facilities in Thailand have been inundated by the recent flooding in the country. Although we are currently assessing the impact of the flooding, it is difficult to reasonably estimate such impact on our consolidated business forecasts at this time. Therefore, our full-year business forecasts for fiscal 2012 are not determined. We plan to disclose the forecasts when we announce our new medium-term plan on November 29, 2011.

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.

About Pioneer

Pioneer Corporation is a leading global manufacturer of consumer and business-use electronics products such as audio, video and car electronics. Its shares are traded on the Tokyo Stock Exchange (TSE: 6773). For more information , please visit http://pioneer.jp .

Source: Pioneer

Contact:

Investor Relations Department, Corporate Communications Division
Pioneer Corporation, Japan
Phone: +81-44-580-1004
Fax: +81-44-580-4064
E-mail: pioneer_ir@post.pioneer.co.jp
IR Website: http://pioneer.jp/ir-e/>

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