October 30, 2000
JVC
REPORTS BUSINESS RESULTS FOR FIRST HALF OF FISCAL 2000
(April 1 -
September 30, 2000)
Victor Company of Japan,
Ltd. (JVC) announced today it registered consolidated
sales of 443.3 billion yen for the first half of fiscal
2000 (April 1 - September 30, 2000) up 2.5% from the same
period of fiscal 1999.
To explain the mid-term consolidated results, business
conditions continued to be severe in Japan, but there
were signs that a capital investment-led recovery may be
gearing up. Nonetheless, the domestic AV (audio-visual)
industry saw a general decline in performance compared to
the previous year; consumer spending was stagnant in
spite of the boost from the Sydney Olympic Games.
However, U.S. economy remained comparatively strong
despite expectations of a slowdown, and Europe and Asia
continued to post solid expansion.
JVC positions fiscal 2000 as the year that it is
transformed into a "digital & network
company." Our emphasis is on expanding sales of
digital & network products like our digital video
camcorders, D-VHS decks and DVD players.
JVC's consolidated domestic sales rose 5.2% from the last
mid-term. Software and media product services turned in
strong growth in spite of sluggish consumer spending and
falling prices. International sales rose 1.0% thanks to
strong support from Europe, North America and Asia, which
counteracted the impact of the higher yen. The result was
overall mid-term sales of 443.3 billion yen(a 2.5% gain
from the last mid-term's 432.4 billion yen).
The divisional breakdown shows sharp growth for domestic
sales of digital video camcorders and DVD players in the
consumer products division, but the division as a whole
continued to struggle due to the general decline in the
industry caused by sluggish consumer spending and the
additional impact of falling prices. Internationally, the
higher yen had an adverse influence, but sales of
camcorders and DVD players were solid nonetheless.
Overall, the division posted a bit more than 286.6
billion yen in sales (a 2.6% gain from the last
mid-term's 279.4 billion yen).
The professional products division saw robust domestic
sales of security cameras and similar products thanks to
the recovery in private-sector investments, but sales
were slow for D-ILA projectors, professional video
equipment and karaoke systems. Overseas, sales of
professional DVs (digital VCRs and camcorders) were
strong, but ILA projectors suffered. Overall, the
division recorded a bit more than 39.7 billion yen in
sales (a decline of 9.0% from the last mid-term's 43.7
billion yen).
The electronic components division posted strong results
for VIL (Victor Company of Japan, Ltd. Interconnected
Layers) Build-up PWBs, crystal oscillators, motors and
other information-related components, but falling prices
and adverse exchange rates combined to bring sales values
below the last mid-term's levels. Overall sales for the
division were a bit over 32.3 billion yen (a 5% decline
from the last mid-term's 34.0 billion yen ).
The software and media products division struggled during
the term because of an industry-wide slump in the music
market and a lack of major new video software releases.
The figures compared to the last mid-term did, however,
rise because of sales commissions from Universal Music
K.K. and the capital stake taken in Teichiku
Entertainment, Inc. Overall sales for the division were a
bit more than 81.1 billion yen (a 13.5% gain from the
last mid-term's 71.5 billion yen).
Sales for other divisions were 3.2 billion yen (a 10%
decline from the last mid-term's 3.6 billion yen).
The profit and loss statement shows a loss of just over
3.6 billion yen on the operating level (compared to a
loss of 1.5 billion yen in the last mid-term). Sales of
digital & network products increased and the
restructuring program initiated the last mid-term helped
to reduce fixed costs, but profits were hurt by declining
market prices, the stronger yen, and the lack of
improvement in raw costs due to the collapse in the
supply and demand balance for components. At the
recurring level, the company posted ordinary profits of
2.2 billion yen (compared to 1.1 billion yen loss in the
last mid-term) thanks in part to profits on the dealings
in stock shares held by U.S. subsidiaries. At the current
level, the company recorded a loss of just over 5.6
billion yen (compared to a loss of 4.3 billion yen in the
last mid-term) due in part to special retirement fund
charges and business structure improvement costs.
At the non-consolidated level, JVC recorded sales of
282.4 billion yen this term, a 2.7% gain over the last
mid-term.
Domestic sales declined 4.7% from the last mid-term to
just over 99.3 billion yen (compared to 104.2 billion yen
in the last mid-term) because of general sluggishness in
the AV (audio-visual) industry and falling prices. Export
sales were hurt by the higher yen but still rose 7.3%
from the last mid-term thanks to continued strength in
the U.S. economy and solid economies in Europe and Asia.
Export sales reached a bit over 183.1 billion yen
(compared to 170.7 billion yen in the last mid-term).
The non-consolidated profit and loss statement shows a
loss of just over 5.4 billion yen at the operating level
(compared to a loss of 6.9 billion yen in the last
mid-term). The shift towards digital & network
products improved earnings and restructuring programs
reduced fixed expenses, but the company was hurt by
falling sales prices, the stronger yen, and the lack of
improvement in raw costs due to component shortages. At
the recurring level, the company posted a profit of 1.4
billion yen (compared to loss of 3.9 billion yen in the
last mid-term), in part because of dividends paid by U.S.
subsidiaries. At the current level, the company recorded
a loss of 4.9 billion yen (compared to a loss of 6.9
billion yen in the last mid-term) because of special
retirement fund charges, losses incurred in the support
of affiliates and special charges resulting from
restructuring (business structure improvement costs
etc.).
The board of directors in its meeting today regretfully
decided to forgo the midterm dividend payment.
Outlook for the
Second Half (to March 2001)
For the second half of the
year, the company anticipates fiercer competition in the
domestic consumer AV industry, a soft landing for the
U.S. economy, and continued unfavorable trends in foreign
exchange rates and component supplies.
JVC has a goal of normalizing its business during fiscal
2000, and to that end will continue to expand sales of
its digital & network products, shift production
overseas, consolidate domestic manufacturing facilities,
and take other steps as needed to restructure its
operations and products, improve its earnings and reduce
its costs.
1.Below is our current
full-year forecast for fiscal 2000:
| 1.
Consolidated forecast |
| |
Sales |
930.0 billion |
(107% Compared with FY 1999) |
| |
Ordinary profits |
15.0 billion |
(+ 23.4
billion Compared with FY 1999) |
| |
Net profits |
3.0 billion |
(+ 8.3
billion Compared with FY 1999) |
| 2.
Non-consolidated forecast |
| |
Sales |
580.0 billion |
(106% Compared with FY 1999) |
| |
Ordinary profits |
11.0 billion |
(+ 25.7
billion Compared with FY 1999) |
| |
Net profits |
1.5 billion |
(+ 27.9
billion Compared with FY 1999) |
# # #
Attachment 1
1. Consolidated
Financial Highlights for First Half of Fiscal 2000 (Ended
September 30, 2000)
| |
Apr. 1~Sep. 30
'00 * |
Apr. 1~Sep. 30
'99* |
Compared with
FY1999(%) |
| Total
Sales |
443,301 |
432,462 |
103 |
| Operating Income |
-3,691 |
-1,533 |
- |
| Ordinary
Income |
2,229 |
-1,146 |
- |
| Net
Income |
-5,679 |
-4,371 |
|
| Net
Income per share |
-22.34 |
-17.20 |
|
| Total
Assets |
584,201 |
587,937 |
|
| Stockholder's equity |
167,397 |
227,382 |
|
| Stockholder's equity per share |
658.45 |
894.45 |
|
| *Amounts in millions of yen, except
per share cash loss and per share stockholder's equity. |
| Note:
75 consolidated subsidiaries and 2 affiliated
companies accounted for by the equity method are
included. |
2. Consolidated Sales by Product
Lines
| |
Apr. 1~Sep. 30
'00** |
Apr. 1~Sep. 30
'99** |
Compared with
FY1999 |
| |
|
(%) |
|
(%) |
(%) |
| Consumer electronics |
286,682 |
(65) |
279,499 |
(65) |
103 |
| Professional electronics |
39,795 |
(9) |
43,711 |
(10) |
91 |
| Electronic components |
32,384 |
(7) |
34,082 |
(8) |
95 |
| Software and media products
|
81,165 |
(18) |
71,536 |
(16) |
113 |
| Others |
3,273 |
(1) |
3,635 |
(1) |
90 |
| Total |
443,301 |
(100) |
432,464 |
(100) |
103 |
| Domestic: |
165,076 |
(37) |
156,948 |
(36) |
105 |
| Overseas Sales |
278,224 |
(63) |
275,516 |
(64) |
101 |
| **Amounts in millions of
yen |
| Consumer
electronics: |
Video
cassette recorders, camcorders, blank video
tapes, color TVs, stereo components and related
equipment, CD portable systems, car audio,
telephone machines |
| Professional
electronics: |
Professional
and educational equipment, information-related
equipment, karaoke systems, and projectors |
| Electronic
components: |
Parts
for display purposes, video heads and
motors,high-density printed wiring boards (PWBs) |
| Software
and media products: |
Music
and video software, such as CDs, videodiscs,
prerecorded music and video tapes, etc. |
| Others:
|
Home
furniture, etc. |
| Note:
The description of product lines has been changed
since this term (the first half of FY 2000).
Sales amount for each category of last term is
adjusted accordingly. |
# # #
Attachment 2:
1.
Non-Consolidated Financial Highlights for First Half of Fiscal 2000
(Ended September 30, 2000)
| |
Apr. 1~Sep. 30
'00 * |
Apr. 1~Sep. 30
'99* |
Compared with
FY1999(%) |
| Total
Sales |
282,443 |
274,989 |
103 |
| Operating Income |
-5,450 |
-6,929 |
- |
| Ordinary
Income |
1,404 |
-3,949 |
- |
| Net
Income |
-4,945 |
-6,953 |
|
| Net
Income per share |
-19.45 |
-27.35 |
|
| Total
Assets |
413,738 |
378,707 |
|
| holder's equity |
180,234 |
197,175 |
|
| Stockholder's equity per share |
708.94 |
197,175 |
|
| *Amounts in millions of yen, except
per share cash loss and per share 's equity. |
2.
Non-consolidated Sales by Product Lines
| |
Apr. 1~Sep. 30
'00**** |
Apr. 1~Sep. 30
'99**** |
Compared with
FY1999 |
| |
|
(%) |
|
(%) |
(%) |
| Consumer electronics |
200,929 |
(71) |
191,722 |
(70) |
105 |
| Professional electronics |
31,080 |
(11 |
28,768 |
(10) |
108 |
| Electronic components |
28,425 |
(10 |
32,089 |
(12) |
89 |
| Software and media products
|
18,334 |
(7) |
19,126 |
(7) |
96 |
| Others |
3,672 |
(1) |
3,281 |
(1) |
112 |
| Total |
282,443 |
(100) |
274,989 |
(100) |
103 |
| Domestic: |
99,320 |
(35) |
104,268 |
(38) |
95 |
| Overseas Sales |
183,122 |
(65) |
170,720 |
(62) |
107 |
| ****Amounts in millions of
yen |
| Consumer
electronics: |
Video
cassette recorders, camcorders, blank video
tapes, color TVs, stereo components and related
equipment, CD portable systems, car audio,
telephone machines |
| Professional
electronics: |
Professional
and educational equipment, information-related
equipment, karaoke systems, and projectors |
| Electronic
components: |
Parts
for display equipment, video heads and
motors,high-density printed wiring boards (PWBs) |
| Software
and media products: |
Music
and video software, such as CDs, videodiscs,
prerecorded music and video tapes, etc. |
| Others:
|
Home
furniture, etc. |
| Note:
The description of product lines has been changed
since this term (the first half of FY 2000).
Sales amount for each category of last term is
adjusted accordingly. |
# # #
Attachment 3
a. Basic principles
JVC acknowledges that it
is a public vessel which utilizes capital raised from the
general public in its operations and seeks to maximize
the profits therefrom while harmoniously coexisting with
local communities, protecting the global environment,
improving living standards, and enriching lives and
culture.
b. Management
policies for fiscal 2000
JVC positions fiscal 2000
as the year that it transforms itself into a "digital
& network company." Its highest priority is on
original, innovative entertainment communications and
services that are "compatible" with and
"make use" of digital and networking
technologies.
1. Business
reforms
JVC is reforming its
business in order to normalize operations and complete
its
transformation into a
digital & network company. It seeks to improve its
profitability by completing the reform of its management,
expanding its operations in high-profit areas like
"components and devices" and "software and
media products," and restructuring its professional
systems operations. Below is an outline of the major
restructuring themes on which the company is focusing.
| |
1) |
Improved raw profit rates from
expanded sales of digital & network
productsIn fiscal 1999, digital & network
products accounted for 40% of non-consolidated
sales. This will be increased to 50% in fiscal
2000, so as to improve raw profit rates, increase
earnings and assure the company of profits.
|
| |
2) |
Cost
improvements from expanded overseas production
JVC had an
overseas production ratio of 53% in fiscal 1999,
which will increase to 60% in fiscal 2000, with
consequent reductions in raw costs. The main
focus of its overseas production is VHS-C
camcorders. The company will also reorganize its
domestic production facilities, including closure
of the Utsunomiya and Okurayama factories. |
| |
3) |
Reduced fixed costs from
restructuring program
JVC will be reducing its fixed costs by
accelerating implementation of its "10,000
employee" program. |
| |
4) |
Strengthening of affiliates
JVC began to strengthen its affiliates last year
with the reorganization of its U.S. projector
business. These efforts will contribute to
improved consolidated profits. |
| |
5) |
Introduction of
"Company-in-Company"
System
JVC introduced a "Company-in-Company" System
in April 2000. The system goes beyond traditional
product-based divisions to reorganize JVC along
more dynamic, strategic lines for faster
decision-making. |
2. Direction of
structural reforms
JVC seeks to reorganize
its business structure through expanding its "components and devices" and
"software and media products" businesses, while restructuring its consumer AV products and "professional
products" businesses in the coming digital
& network age.
| |
1) |
Consumer products
The consumer AV business will seek to make all
JVC consumer products network-compatible,
allowing contents to be distributed over a wide
range of media. |
| |
2) |
Professional
products
JVC's professional products business will
emphasize systems integration, with particular
focus on contents production systems and network
systems. |
| |
3) |
Electronic
components
JVC's electronic components operations will focus
on the VIL (Victor Co. of Japan, Ltd.
Interconnected Layers) Build-up PWBs that will
play a key role in the development of more
compact, higher frequency equipment for the
digital & network age, and on display
devices, a traditional strength of JVC. |
| |
4) |
Software
and media products
JVC will strengthen its operations in software
production systems and services and software
distribution services. |
c. Basic
profit allocation policies
JVC pays dividends
commensurate with earnings. Funds retained on hand are
used to strengthen operations in
preparation for more intense competition and changes in
the industrial environment and to develop future
businesses.
JVC is regrettably forced to forgo the fiscal 2000
mid-term dividend payment.
d. Basic
policies on parent-company relationsp
JVC is a
subsidiary of Matsushita Electric Industrial Co. Ltd.,
which owns 52.4% of our shares. JVC has traditionally
been managed independently in all aspects, based on the
concept of "mutual development through competition".
However, the company is studying the potential for
collaboration with the Matsushita Group in light of the
increasing importance, from a consolidated standpoint, of
alliances that will supplement our business resources in
the digital & network age. It is hoped that increased
collaboration with our parent company will improve JVC's
ability to adapt to the changing circumstances of the
digital age and reinforce its earnings structure.
# # #
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