New Restructuring Measures
12 February 2009 - 10:52PM
UK Regulatory
TIDM35SV
RNS Number : 2283N
Pioneer Corporation
12 February 2009
For Immediate Release
February 12, 2009
Pioneer Announces Restructuring Measures
TOKYO - Pioneer Corporation has announced that at a meeting of its Board of
Directors held today, the Company approved new restructuring measures. Details
are as follows.
I. Progress with Restructuring Measures Currently Under Way
Pioneer has been implementing restructuring measures mainly to improve
profitability in the display business since 2008. These measures have included
termination of in-house plasma display panel production and implementation of
early retirement programs including personnel in administrative and sales
divisions. Overseas, we have started to streamline our sales structures and have
decided to close plasma display production facilities. Plans call for ending
production at our U.S. and U.K. display production facilities in April and
February 2009, respectively. Pioneer expects to complete these restructuring
measures within the first half of 2009.
Pioneer's consolidated workforce decreased by approximately 5,900 employees from
March 31, 2008 to roughly 36,900 employees as of December 31, 2008. The number
of temporary employees also decreased by approximately 4,000 in the same period.
However, Pioneer has been affected significantly by dramatic changes in economic
conditions since the fall of 2008-an impact that has far outweighed the benefits
being generated by the aforementioned restructuring measures. Pioneer is now
forecasting a record net loss for fiscal 2009, the year ending March 31, 2009.
II. New Restructuring Measures
For these reasons, Pioneer will implement new restructuring measures as detailed
below.
1.Business Portfolio Realignment
Pioneer will realign its business portfolio through further drastic
restructuring measures in the Home Electronics business, an area where the
Company has been unable to achieve improvements in profitability despite
implementing various initiatives. Through this process, Pioneer aims to
transform itself into an enterprise centered on the Car Electronics business.
(1)Home Electronics Business
Pioneer will terminate any further in-house display product development after
its products currently available on the market, and withdraw from the display
business by March 2010. Recent market conditions have changed far more than
initially anticipated, and Pioneer has decided to withdraw from the display
business after concluding that there are no prospects for improving
profitability under current conditions. However, the Company will continue to
provide after-sales services even after the withdrawal.
In the optical disc business, we are considering measures for improving
profitability, including forming a joint venture.
Looking ahead, Pioneer will develop Home Electronics business centered on three
areas, namely audio products, DJ equipment and cable TV set-top box businesses.
We will focus on our specialization in "sound," as we take advantage of our
extensive audio technologies and expertise developed over the years to develop
new business domains.
(2)Car Electronics Business
The Car Electronics business, both in consumer and OEM business areas, is
currently severely affected by lower demand for automobiles due to weakening
economic conditions. Lackluster auto demand is expected to continue for some
time, but should see signs of recovery in fiscal 2011, the year ending March 31,
2011. Looking to the future after this, Pioneer expects growing demand for
higher levels of environmental performance and energy efficiency in the
automotive field. Pioneer will shift business resources from display field into
the Car electronics business, and leverage its market position and technological
expertise, to open up a range of new business opportunities.
First, Pioneer will expand new lineups, including Blu-ray Disc compatible models
and network-ready products, as well as strengthen the telematics business. In
the medium term, we will aim to develop the telematics business into a key
growth engine for the Car Electronics business.
In the consumer business, Pioneer has been working to expand business in
emerging markets centered on the BRICs nations, and these efforts are steadily
producing results. Although these markets are currently experiencing stagnant
growth due to worsening economic conditions, the Company will strengthen its
efforts to stimulate demand in these markets in order to revive growth in these
markets and to offset contraction in the Japanese, U.S. and European consumer
markets.
In the OEM business, Pioneer will work to win a broader range of orders,
especially in the car navigation business. With this aim, Pioneer will
vigorously propose new value-generating solutions to automobile manufacturers by
leveraging its expertise in consumer markets, where the Company has won high
acclaim for its network compatibility and introduction of high added-value
products.
Pioneer will strive to enhance the operating structure of the Car Electronics
business primarily by reducing costs and reviewing its business structure, in
order to generate earnings in challenging market conditions. In software
development for car navigation systems, which is an area with burgeoning costs,
we will simplify processes in order to raise development efficiency. At the same
time, we will promote the use of common hardware platforms, thereby curbing
development expenses related to both hardware and software. To this end, Pioneer
is discussing possible collaboration with other companies. In other areas,
Pioneer will also reduce costs to ensure that the Company steadily improves
profitability. For example, we will work to lower distribution costs; raise
production efficiency by consolidating production facilities for the entire
Pioneer Group, and overhaul sales structures.
Although a difficult business environment is expected to persist for some time,
Pioneer will work to complete enhancing its operating structure as early as
possible and lay a firm foundation for new growth after market conditions
improve.
2. Streamlining the Business Framework of the Entire Pioneer Group
Pioneer will take action to streamline the business framework of the entire
Pioneer Group. We will consolidate our network of production facilities in Japan
and overseas by taking the following actions: we will withdraw from the display
business; review our production system in the Car Electronics business to
achieve optimum efficiency; and consolidate production facilities as part of
ongoing efforts to integrate the speaker business. We intend to reduce our
current 30 production companies around the world by roughly 30% in number in
order to reduce production costs.
Regarding our sales structures, we are currently formulating detailed plans to
adjust our sales framework to match the business scale in line with
restructuring measures in the Home Electronics business. These plans include an
overhaul of sales structures in Japan and overseas.
In addition, we plan to adjust headquarters and R&D functions to a scale that
matches the new business structure.
Through these measures, we plan to reduce personnel by around 6,000 employees
worldwide compared with our workforce as of December 31, 2008, including
restructuring measures currently in progress. To this end, we will begin
discussions with labor unions in various regions. In addition, we plan to reduce
the number of temporary employees by approximately 4,000.
3. Improving Our Financial Position
Pioneer will work to improve its financial position by reducing inventories,
accelerating trade receivables collections, curbing capital expenditures,
selling idle assets, and cutting directors/executive officers' remuneration and
employees' salaries. Basic portion of directors/executive officers' remuneration
has been reduced since July 2008, and beginning in February 2009 the reduction
will be some 20% to 50% until March 2011. No bonus payments for
directors/executive officers will continue. We are also considering financial
partnerships for enhancing our future financial position.
4. New Businesses for Future Growth
We are working to identify new businesses that will drive future growth. Pioneer
holds a number of superior technologies, including next-generation hard disk
manufacturing equipment based on optical disc production and fine processing
technologies, as well as high-value-added electronic components using
ultra-sensitive imaging elements. We will work hard to commercialize these
technologies for industrial use as early as possible. Pioneer is also working
hard to achieve further growth through creating new businesses such as
developing products built into homes and research into "sound" in daily life, in
addition to just conventional ordinary home-use electronics products.
Through the above restructuring measures, Pioneer is determined to restore
profitability. Full details on these restructuring measures will be announced
once they have been finalized.
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 Japanese yen and the U.S. dollar, the
euro, 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 highly rated products and services in extremely competitive
markets, which are characterized by continual product launches, rapid
technological development, intense price-based competition, subjective and
changing consumer preferences and other factors; (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 expenditure; (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 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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