Kenwood 2002 Annual Report Download - page 14

KENWOOD Corporation Annual Report 2002
12
Financial Review 2002
The Japanese economy during the term ended March 2002
went from bad to worse with falling stock prices, inactive
consumer spending, restrained growth in private investment,
and low exports. Overseas, although the U.S. economy is
showing some signs of recovery, the overall outlook is not
bright as Europe and Asia remain stagnant. Under these
circumstances, the electronics industry continued to suffer from
yet intensified price competition.
Consolidated Performance
Sales
During the year ended March 2002, domestic sales for home
audio and car audio products dropped, due mainly to falling unit
prices and the stagnant economy. The termination of some
export models in home audio also led to reduced sales
overseas. On the other hand, strong performances were
delivered by Personal Digital Cellular phones in the Japanese
market and by car audio products overseas. As a result,
Kenwood as a group saw only a 0.2% reduction in sales, which
overall amounted to 302.6 billion yen.
Looking at sales by region, 127.4 billion yen (a decrease of
3.4% from the previous year) was earned in Japan, while
overseas sales amounted to 175.2 billion yen (an increase of
2.2%). 42.1% (43.5% the previous year) of total sales came
from the domestic market and 57.9% (56.5% the previous year)
from overseas.
Looking at the performance by business segment, the audio
business suffered a decrease of 5.8% from the previous year, to
218.4 billion yen. Despite strong export sales for car audio
products, home audio struggled both in and out of Japan and
there was reduced domestic demand for car audio. Meanwhile,
the communications business increased its sales by 17.6% to
84.2 billion yen, thanks to expanded sales for PDC phones in
the Japanese market and commercial radio elsewhere.
Expenses and Earnings
The cost to sales ratio has been improved from the previous
year’s 77.8% mark to 76.5% as a result of continued efforts
throughout the Company for cutting down on expenses and
reducing production costs. Cost of sales was down to 231.5
billion yen (235.9 billion yen for the previous year), gross profit
increased to 71.1 billion yen (67.4 billion yen the previous year),
selling, general and administrative expenses dropped 3.6% to
65.0 billion yen, and operating income improved significantly to
6.1 billion yen (zero income for the previous year).
However, as much as 30.6 billion yen can be found in the
statement for “other expenses”, as compared to 18.0 billion yen
the previous year. This includes devaluation of investment
securities due to low stock prices, a significant revaluation of
inventories in an effort to get ready for an unstable economy,
and a provision for loss on business restructuring of 10.0 billion
yen, set aside for implementation of the Kenwood New
Restructuring Plan. Consequently, the Company reported a
Net Sales by Segment
(Billions of yen)
0 10050 200 250150 300
2002
2001
2000
1999
1998
Operationg Income
(Billions of yen)
01591263
2002
2001
2000
1999
1998
Audio equipment Communications equipment