Jvckenwood Corporation · TSE:6632
Jvckenwood — Q2 FY2011 Earnings Presentation
48 slides from Jvckenwood's earnings presentation, Oct 29, 2010
Slide 1: JVC Kenwood Group's Results and Forecast Briefing
Translation for Reference Only JVC Kenwood Group’s Results and Forecast Briefing Second Quarter of Fiscal Year Ending March 2011 JVC KENWOOD Holdings, Inc October 29, 2010 Copyright © 2010 JVC KENWOOD HOLDINGS All rights reserved. May not be copied or reprinted without prior written approval.
Slide 2: Agenda
1. Financial Results Overview for 2Q of Fiscal Year Ending March 2011 2. Business Forecasts for Fiscal Year Ending March 2011 3. Effects of Action Plan for Business Structural Reform, Progress in Action Plan for Reconstructing Corporate Base and Materialization of Mid-term Management Plan Haruo Kawa
Slide 3: Financial Results Overview for 2Q of FY Ending March 2011
Financial Results Overview for 2Q of the Fiscal year Ending March 2011 [Abbreviation] CE: Car Electronics (Business) BB: Professional Systems (Business) COM: Communications (Segment ), BS: Business Solution (Segment) HM: Home & Mobile Electronics (Business) DP: Display (Segment), CAM: Camcorder (Seg
Slide 4: 2Q - Financial Results - Summary
2Q - Financial Results - Summary * CE and BB, which are subject to business enhancement, remained robust, following the 1Q. * Earnings improved thanks to cost reduction in the entire Group. Operating profit was better than expected in all business segments, resulting in significant year-on-year impr
Slide 5: 2Q - Quarterly financial results
2Q - Financial Results - Quarterly financial results * Since the management integration, operating income hit a record high for the third quarter in a row. * We posted an ordinary income for the second quarter in a row. 150 Operating profit 5 Ordinary income Operating profit ⋅ Ordinary Net Sales (bi
Slide 6: 2Q - Financial Results - Net Sales
2Q - Financial Results - Net Sales 2Q results: JPY87.8B (First-half period: JPY176.6B) * In the CE business, sales remained firm in both the consumer and OEM segments, while sales for the BB business remained unchanged from the corresponding quarter of the previous fiscal year as orders received rec
Slide 7: 2Q - Financial Results - Operating profit
2Q - Financial Results - Operating profit 2Q results: JPY3B (First-half period: JPY5.4B) * Earnings of the CE business remained strong following on from 1Q. * The overall BB business grew sharply, as the profitability of the COM segment recovered and the BS segment moved into the black. * The perfor
Slide 8: 2Q - Financial Results - Ordinary income
2Q - Financial Results - Ordinary income 2Q results: JPY0.3B (First-half period: JPY2.1B) * Consolidated ordinary income improved JPY2.7B from a year earlier as operating profit rose sharply. A positive ordinary income was posted for the second quarter in a row following 1Q, although an ordinary los
Slide 9: 2Q - Financial Results - Quarterly Net Income
2Q - Financial Results - Quarterly Net Income 2Q results: JPY-2.8B (First-half period: JPY-3.2B) * There was a total extraordinary loss of JPY2.5B, due to losses on sale of fixed assets (JPY0.3B), employment structural reform expenses (JPY0.7B), and impairment loss (JPY1B). Net income improved JPY4.
Slide 10: First-half Period - Analysis of Year-on-Year Changes
First-half Period - Financial Results - Analysis of Year-on-Year Changes * Net sales dropped due to a decrease in sales for the HM business (caused by the curtailment of DP operations and a fall in sales of CAMs). * Profits rose due to improved profitability (in HM business, BS segment, and SE busin
Slide 11: Information by Business Segment
Information by Business Segment 11
Slide 12: 2Q - Car Electronics Business
2Q - Car Electronics Business 2Q Net sales: JPY 26B (First-half period: JPY55B) 2Q Operating profit: JPY 1.9 B (First-half period: JPY4.7B) * Consumer: Following on from 1Q, sales of product lines, whose cost competitiveness strengthened as a result of management integration, remained strong, and sa
Slide 13: 2Q - Professional System Business
2Q - Professional System Business 2Q Net sales: JPY 23.7B (First-half period: JPY44B) 2Q Operating profit: JPY 1.4B (First-half period: JPY0.6B) * COM：Following on from 1Q, orders received for public safety products recovered in the U.S., and sales of originally developed digital radio systems for t
Slide 14: 2Q - Home & Mobile Electronics Business
2Q - Home & Mobile Electronics Business 2Q Net sales: JPY 25.4 B (First-half period: JPY52.5B) 2Q Operating profit: JPY -0.4 B (First-half period: JPY-0.7B) * DP: Despite a 50% fall in sales, losses decreased significantly because of a reduction in fixed costs through business restructuring reforms
Slide 15: 2Q - Entertainment Business
2Q - Entertainment Business 2Q Net sales: JPY 10.8 B (First-half period: JPY21B) 2Q Operating profit: JPY 0.3 B (First-half period: JPY0.9B) * Software business: There was a stream of hit music albums released, following on from 1Q, despite the influence of delayed releases and large projects being
Slide 16: First-half Period - Sales by Region (Reference)
First-half Period - Financial Results - Sales by Region (Reference) [Japan] Sales increased due to increases in sales of the CE business and the BS segment. [The Americas] Sales decreased due to a fall in sales of the HM business, although sales of the CE business and the COM segment increased. [Eur
Slide 17: 2Q - Financial Results - Financial Status
2Q - Financial Results - Financial Status Balance Sheets * Total assets decreased JPY 27.2 B from the end of the previous fiscal year due to a decline in trade notes and accounts receivable and sales of tangible fixed assets. * Interest-bearing debts (sum of loans payable and bonds payable) decrease
Slide 18: Financial Status - Cash flows
2Q - Financial Results - Financial Status Cash flows key measures: “Increase of Cash” Cash flows from operating activities * Net cash generated by operating activities in the first-half period was about JPY11.7B, up about JPY2.6B from a year earlier. The main factors (compared to the first-half peri
Slide 19: 2. Business Forecasts for Fiscal Year Ending March 2011
2. Business Forecasts for Fiscal Year Ending March 2011 19
Slide 20: Earnings Forecast for FYE3/'11
Earnings Forecast for FYE3/’11 * With regard to net sales, the Group took into account a decrease in overseas sales due to conversion into yen attendant upon the strong yen. * The Company kept its operating profit and ordinary income forecasts for the 3Q and beyond at the levels of the revised forec
Slide 21: Earnings Forecast for FYE3/'11 - Net Sales
Earnings Forecast for FYE3/’11 - Net Sales * Taking into account the effects of the strong yen, etc., the Group reflected the results for the first-half period and assumed reductions in 3Q and beyond. 400 (billion yen) Effect of exchange rates Risk factors in 3Q and beyond 350 380 360 0 Revised fore
Slide 22: Earnings Forecast for FYE3/'11 - Operating profit
Earnings Forecast for FYE3/’11 - Operating profit * Although the economic environment in 3Q and beyond is uncertain, the Group left its operating profit forecast at the level of the revised forecast announced on July 28, taking into account the earnings recovery up to 2Q, and reflected only the upwa
Slide 23: Earnings Forecast for FYE3/'11 - Net Income
Earnings Forecast for EYE3/’11 - Net Income * Structural reforms advanced as planned, and an increase in ordinary profit and a decrease in extraordinary loss are reflected. 15 (billion yen) 15 (billion yen) 15 (billion yen) Initial forecast Revised forecast announced Revised forecast announced on Ju
Slide 24: 3. Effects of Action Plan for Business Structural Reform and Mid-term Plan
3. Effects of Action Plan for Business Structural Reform, Progress in Action Plan for Reconstructing Corporate Base and Materialization of Mid-term Management Plan 24
Slide 25: Effects of Action Plan through Four Structural Reforms
Effects of “Action Plan for Business Structural Reform” through Four Structural Reforms (Implemented in the previous fiscal year) 25
Slide 26: Effects of Action Plan - Four Structural Reforms
Effects of “Action Plan for Business Structural Reform” - Four Structural Reforms The Group implemented and completed the “Action Plan for Business Structural Reform” through four structural reforms by the end of FYE 3/’10. Operating profit for the first-half period: Improvement of JPY13.2B year-on-
Slide 27: Progress in Action Plan for Restructuring Corporate Base
Progress in “Action Plan for Restructuring Corporate Base” 27
Slide 28: Reforming unprofitable operations
Reforming unprofitable operations DP >> Eliminating deficit We have almost terminated own production and sales by own sales companies in all regions, including Europe and North America, but excluding Asia. We converted our business model into an asset-light business model through outsourcing to
Slide 29: Reconstructing the global operation system
Reconstructing the global operation system Sale and relocation of Head Office * We sold the head office in Yokohama (in June 2010) and pressed ahead with integrated operations and cost reductions by relocating the functions of the head office. Reorganizing the production system * Yokosuka Plant of J
Slide 30: Strategic investment, financial and capital strategies, and management reform
Strategic investment, financial and capital strategies, and management reform Increasing cash flows and reducing total assets * Cash flows from operating activities in the first-half period: JPY11.7B; sale of fixed assets: JPY10.6B. * Free cash flow: JPY18.4B >> Interest-bearing debts: down JPY8.1B
Slide 31: Implementation of the Mid-term Management Plan
Implementation of the “Mid-term Management Plan” 31
Slide 32: Mid-term Target - Early resumption of dividend payments
Implementation of “Mid-term Management Plan:” Mid- term Target – Early resumption of dividend payments * For FYE 3/’11: Post ordinary The probability of achieving these targets has income increased due to the results for the first-half period * For FYE 3/’12: Post current net and efforts made so far
Slide 33: Why focus on Car Electronics and Professional Systems?
Why are we focusing on the Car Electronic and Professional Systems Businesses? Car Electronics Business * Existence of large markets, including expansion of emerging markets * Growth through consumer segment and OEM segment to be converted to consumer use * Outstanding competitiveness that especiall
Slide 34: Car Electronics Business - Growth Strategy
Car Electronics Business - Growth Strategy * Consolidate our global position as the top firm in the consumer car audio segment, in which we rank first in Europe and the U.S. * Aim at the global top position in the consumer car electronics segment, which combines car audio products and car navigation
Slide 35: Car Electronics: Key Measure (1) Emerging markets
Car Electronics Business: Key Measure (1) (1) Sales expansion in emerging markets <Sales in emerging countries* (billion yen)> [Brazil] 400 40 * Completed building integrated sales system * Started full-scale business development with a 19 new partner for production outsourcing [India] * Strengthene
Slide 36: Car Electronics: Key Measure (2) Car navigation systems
Car Electronics Business: Key Measure (2) (2) Sales expansion of car navigation systems through integrated resources and partnership strategy * Growth strategy considering market shift from HDD car navigation systems to car navigation systems using flash memory * Outstanding competitiveness through
Slide 37: Car Electronics: Key Measure (3) Next-generation car electronics
Car Electronics Business: Key Measure (3) (3) Leading development of next-generation car electronics * Development of products in a new category, making good use of current car electronics technologies * Leading development of next-generation car electronics, to which ecology and security/safety fun
Slide 38: Professional Systems - Integrated Growth Strategy for COM and BS
Professional Systems Business - Integrated Growth Strategy for the COM and BS Segments * Drive integrated growth strategy of COM segment of Kenwood, which has the second largest presence in the world, and BS segment of JVC, which has a great presence in Japan * Integrate main business bases of Land
Slide 39: COM Segment: Key Measure (1) Digital radio systems
Professional Systems Business - COM Segment: Key Measure (1) (1) Sales expansion of digital radio systems [For consumers] * Concentrate our energies on developing products that take in strong replacement demand for digital radio systems from users of analogue radio systems * Increase sales in the U.
Slide 40: COM Segment: Key Measures (2) and (3)
Professional Systems Business - COM Segment: Key Measures (2) and (3) <Sales composition ratio of radio systems*1 (%)> (2) Expansion of business region to become a provider of radio communications system solutions * Use wireless communications command and control systems of Zetron, Inc. Expand sales
Slide 41: BS Segment: Key Measure (1)
Professional Systems Business - BS Segment: Key Measure (1) (1) Growth strategy with security-related products as growth driver * Expand the solution business through the introduction of IP systems; take in replacement demand following the spread of high-definition images; and, acquire new customers
Slide 42: BS Segment: Key Measure (2)
Professional Systems Business - BS Segment: Key Measure (2) (2) Growth strategy through integrated operations and partnerships * Increase orders received by sharing sales networks and opportunities for receiving orders through integrated operation with COM segment * Accelerate expansion of high-defi
Slide 43: New Growth Strategy - Entry into New Business Regions
New Growth Strategy - Entry into New Business Regions * Aim to enter new business fields such as medical, education, products for aging population, ecology, and security/safety * Convert our strategy from focusing on development of individual core technologies to a growth strategy aiming at commerci
Slide 44: New Business Fields: Key Measure (1) Medical, education, aging population
Entry into New Business Fields: Key Measure (1) (1) Medical, education, and products for aging population In cooperation with medical schools of a number of universities, develop medical examination and treatment-supporting equipment, education-supporting equipment, and information-providing systems
Slide 45: New Business Fields: Key Measure (2) Ecology and security/safety
Entry into New Business Fields: Key Measure (2) (2) Ecology and security/safety Develop equipment and interfaces to be mounted in vehicles that use image technology, advanced video compression/transmission technology, in- vehicle sound technology, communications/network technology and algorithms for
Slide 46: New Business Fields: Key Measure (3) Joint research and development
Entry into New Business Fields: Key Measure (3) (3) Expansion of joint research and development * Development of 3D image system that makes objects visible to the naked eye with the National Institute of Information and Communications Technology (NICT) * Development of super high-definition 8K4K ima
Slide 47: Strategic Investment, Financial, and Capital Strategies and Management Reform
Strategic Investment, Financial, and Capital Strategies and Management Reform Strategic investment * To intensively appropriate 70% to 80% of our research and development investment and capital investment to the CE and BB businesses and new business fields Financial and capital strategies: Aiming to
Slide 48: Forward-looking statements notice
Expressions contained in this presentation materials referring to the Company's future plans, intentions and expectations are categorized as forwardlooking statements. Such statements reflect management's expectations of future events, and accordingly, they are inherently susceptible to risk, uncert
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