JVC Report
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FOR IMMEDIATE RELEASE: April 26, 2001
JVC REPORTS FISCAL 2000 FINANCIAL RESULTS
Victor Company of Japan, Ltd. (JVC) announced today it registered consolidated sales of 934.3 billion yen for fiscal 2000, up 7.4% from last year's 870.2 billion yen. To explain the consolidated results for fiscal 2000, the Japanese economy was in recovery during the first half of the year, led by private sector capital investments, primarily for IT (Information Technology). During the latter half, however, the slowdown in the US economy combined with falling consumer spending and sliding prices, trends seen also in the first half, to produce lackluster economic performance. Overseas, the year was marked by growing and unresolved uncertainty, with European currencies undergoing sharp swings during the first half, the US economy slowing down in the second half, and Asia experiencing production corrections as a result. JVC responded to this situation by producing a business vision statement designed to normalize its operations and chart the course for transformation into a "Digital & Network Company." During the year it focused on increasing the added value in its core audio-visual equipment and other products, accelerating management decision making with the introduction of "Company-in-Company" system, shifting more production overseas and reorganizing domestic production, and reducing fixed costs so as to bolster corporate strength. The result of these efforts was a steady, significant improvement in JVC's business position. Sales of high value-added digital and networking products (digital video camcorders, DVD players, "high-density build-up multilayer printed wiring boards (PWBs)") accounted for a higher share of the total, raw costs improved thanks to the transfer of VHS-C video camcorder production overseas, and fixed expenses were reduced with the reorganization of domestic production. Consolidated sales were hurt by the slump in domestic consumer spending, delays in the launch of new products due to difficulties in sourcing components, and falling sales in the latter half because of the slowdown in the US economy. Nonetheless, consolidated sales did show year-on-year growth, in part because of a sales commission from the Universal Music K. K. Overall sales rose to just over 934.3 billion yen (up 7.4% from last year's 870.2 billion yen). Turning to the divisional breakdown, consumer equipment recorded substantial growth for DVD players thanks to the expansion of DVD software market; sales were also strong for digital video camcorders, micro component systems and car audio systems. Sales declined for color television sets and VHS video decks, but consumer products sales were still up overall. Overseas, sales of digital video camcorders, DVD players and other digital products grew strongly thanks to the booming US economy in the first half. In the second half, sales of these products were harmed by production backlogs resulting from component shortfalls and also by declining consumer spending in the wake of the economic slowdown. In spite of this, overseas sales were still strong on a full-year basis. consumer equipment generated total sales of just over 598.5 billion yen for the year (up 5.5% from last year's 567.5 billion yen). Professional electronics recorded domestic sales growth despite harsh domestic market conditions for karaoke units. Sales of professional audio systems and security camera systems were up due to a large number of new stores opening after the "Large-scale Retail Stores Location Law" took effect. New products such as satellite distribution systems and BS digital broadcasting up converters also contributed. Overseas, sales of professional camcorders and AV viewers were strong, but broadcasting digital video decks encountered stiff competition, and the launch of new D-ILA projectors was delayed, resulting in declines for these areas. Professional electronics recorded total sales of just over 83.9 billion yen for the year (down 4.5% from last year's 87.8 billion yen). Electronic component devices recorded declining sales at the full-year level. Orders for deflection yokes dropped off as customers moved production overseas and prices fell, and the US personal-computer market slumped during the second half. Sales of "high-density multilayer PWBs" were strong in the first half, but the market turned more severe in the second half as sales for cellular phone units declined. Nonetheless, sales of this product showed full year growth. Sales of motor products were also strong in spite of falling prices and adverse foreign exchange rates. Electronic component devices recorded overall sales of just over 61.5 billion yen for the year (down 5.1% compared to last year's 64.8 billion yen). Software and media products were hurt by the general slump in the music industry and the lack of a major video release, but sales were up thanks to hit albums by the "Southern All Stars" and "SMAP" and a strong showing by new artist "Love Psychedelico." Also contributing were the sales consignment contract from Universal Music K. K. and excellent performance by Teichiku Entertainment, Inc. Software and media products recorded overall sales of just over 183.2 billion yen for the year (up 28.2% from last year's 142.9 billion yen). Sales from other divisions were just over 6.9 billion yen, up slightly (0.5%) from last year, in part because of strong performance by home furniture. The profit and loss statement shows JVC with an operating profit of just over 5.6 billion yen. This profit is due to expanded sales of high value-added digital and networking products and improved raw costs thanks to management structural reforms embarked upon last year. These efforts were able to counteract the impact of falling market prices and adverse exchange rates. The company recorded ordinary profit of just over 12.0 billion yen due in part to profits on the stock portfolio held by a US subsidiary. Net income was just over 2.4 billion yen(compared to a loss of 5.3 billion yen last year). Key factors included special allocations for the retirement fund and structural reform costs incurred in the process of reorganizing company operations. Below is our non-consolidated business results:
JVC plans to pay a dividend of 3 yen per share at the end of FY 2000. Forecast for the year to March 2002 The global economy still faces a great deal of uncertainty; the slowdown in the US economy will affect capital investments and exports around the world and the Japanese economy shows troubling signs of deflation. The industry has been helped by the "IT Revolution," but consumer spending and capital investment have been slow to recover, and the competition for price and service has become more intense. We therefore expect the business environment to grow increasingly severe during the year. Our highest priority is to move forward with reorganization and strengthening the management structure that began in fiscal 2000. The company is shifting its staff and reorganizing its operations so as to establish its main profit centers in high value-added consumer digital and networking equipment, electronic devices, and software and entertainment programming markets. JVC will continue to create new businesses that capitalize on its strength and originality.
Below is our current full-year forecast for fiscal 2001: 1. Consolidated forecast
2. Non-consolidated forecast
# # # Attachment 1 Consolidated Financial Highlights for FY2000 (April 1, 2000 - March 31, 2001) 1. Selected Operating Results
*Amounts in millions of yen, except per share cash income/loss 2. Sales by Product Lines
**Amounts in millions of yen
Note1: The description of product lines has been changed since this term. Sales amount for each category of last term is adjusted accordingly. Note2: United States dollar amount are translated from yen for convenience at the rate of U.S. $1.00 equals 124 yen, the approximate rate prevailing on March 31, 2001. # # # Attachment 2: Non-Consolidated Financial Highlights for FY2000 (April 1, 2000 - March 31, 2001) 1. Selected Operating Results
*Amounts indicated in millions of yen, except cash dividends 2. Sales by Product Lines
**Amounts in millions of yen
Note1: The description of product lines has been changed since this term. Sales amount for each category of last term is adjusted accordingly. Note2: United States dollar amount are translated from yen for convenience at the rate of U.S. $1.00 equals 124 yen, the approximate rate prevailing on March 31, 2001. # # # Attachment 3:
Management Policy Basic philosophy JVC is a public instrument that invests capital entrusted to it by the general public so as to maximize profits, live in harmony with the communities that it serves, protect the environment, enrich human lives and improve culture.
Management policy for FY 2001 JVC has formulated a new mid-term business plan for the years FY 2001-2003. The JVC "Value Creation 21" Plan is a three-year plan for the independent reform of JVC's businesses and charts a course for development in coordination with the overall strategy of the Matsushita Group. JVC participates in the "Value Creation 21" Plan that will guide the Matsushita consolidated companies beginning FY 2001. The new mid-term plan represents the next evolution of JVC's prior strategy of "selection and concentration." Under the new plan, JVC will engage in the fundamental reform of its businesses using the concept "From Deconstruction to Creation." The company will collaborate more actively with the Matsushita Electric Industrial Co., Ltd. as a means of accelerating to create new corporate value. ¨Basic guidelines 1. Top priority on reconstruction and reinforcement of management with "Deconstruction to Creation". - "Deconstruction" removes negative elements of management and establishes base of operations. - "Creation" guides and prioritizes investments of business resources. - "Co-operation" accelerates "creation." 2. 3 Business pillars for earning: Consumer D&N (digital and networking), C&D (components & devices), software and media. 3. Enhance JVC unique and advantageous features within the Matsushita Group to contribute to the total group power. ¨Priority programs1. Compression of CCM assets Capital cost management (CCM) systems will be introduced to shorten lead times and reduce inventories. This and the accompanying reorganization of factories, reforms in business structures and disengaging from cross-shareholding relationships will enable the company to reduce investment assets by approximately 40 yen billion by the end of FY2003, significantly reinforcing its earnings structure. 2. Reinforcement of management structure
-Employees at the end of FY 2000 (JVC Japan domestic) will be reduced to 8,600 by the end of 2003. 3. Acceleration of "creation" through "co-operation" In the past, the relationship between JVC and its parent company, Matsushita Electric Industrial, Co. Ltd., tolerated redundancy and competition, but in the new age of global consolidation, this relationship has changed to one in which JVC carves out its own niche within the group. In the future, JVC will collaborate with Matsushita to accelerate the creation of new and original businesses and organizations. 4. Reorganization of consumer products sales operations in Japan JVC will integrate the sales organizations of the AV & Multimedia Company with the consumer marketing division to enhance the company's ability to respond to market demands. 5. Expansion of consumer Digital and Networking (D&N) business JVC will review (reduce) its lineup of low-cost consumer AV products so as to concentrate its resources on digital and networking products and reverse the percentages of consumer products sales now accounted for by "D&N" and "conventional" products.
(1) Priority on new D&N products (information and communication terminals, hybrid televisions etc.) 6. Reform of Professional Products & Systems operations Reorganization will build a strategy-driven Systems Operation with integrated development, production and sales functions. 7. Shift of human resources to parts business and reinforcement of C&D (parts) operations JVC will assign approximately 100 engineers to its C&D operations in order to expand its C&D Business, a key component in the company-wide effort to improve profitability and develop unique product lines. The new engineers will help expand existing businesses and develop new components and devices. 8. Creation of new businesses JVC will continue to evolve into a "digital, networked company" by creating new businesses. ¨Management Reforms 1. IT reform (SCM establishment) - JVC will have a Supply Chain Management (SCM) program up and running by FY2003 to better integrate its markets and its production. 2. Engineer training and reinforcement - JVC will provide new training and development opportunities for its engineers as it shifts its focus to digital and networking products. - JVC will double the engineers assigned to its D&N and software operations. - Regardless of division, JVC will enact programs to raise the skills of engineers throughout its organization. These programs will make use of training opportunities available within the company, from outside sources, and from the Matsushita group. 3. Reform in management organization and personnel systems - JVC will reform its staffing structure and will develop leaner, more efficient administrative functions. - JVC will identify and train the core personnel for the next generation and will create a corporate culture that values ambition and energy. ¨Basic policy on allocation of company profits JVC's basic policy is to pay dividends commensurate with earnings, retaining such funds as are necessary to adapt to anticipated competition, strengthen the company to withstand changes in the business environment and develop future businesses. JVC plans to pay a dividend of 3 yen per share at the end of FY 2000. ¨Basic policy on relations with parent company JVC's parent company is Matsushita Electric Industrial Co., Ltd., which owns 52.4% of our shares. The growing emphasis on consolidated management and the emerging digital and networked society demand that companies place greater priority on alliances that will supplement their managerial resources. As stated in the section on "Management Policy for FY 2001" above, JVC will increase its co-operation with the Matsushita Group so as to better enable itself to adapt to and profit from the changing environments of the digital age. # # # | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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JAPAN, LIMITED. All rights reserved.