Kenwood 2005 Annual Report Download - page 14

Commencement of new activities for corporate value expansion strategy by overall
completion of profit base restructuring and capital structure reform during the final
year of the first mid-term business plan, the “Excellent Kenwood Plan”
Management Policy
Commencement of New Activities for Corporate Value
Expansion Strategy
2006.3 ฀
In May 2003, our corporate group formulated the first mid-term business
plan, the “Excellent Kenwood Plan,” for the rebirth of Kenwood and raised
four management targets including “Resumption of Dividends,”
“Management with No Substantial Debts (Zero Net Debt),” “20% ROE” and
“10% Operating Profit Margin.” During the term ended March 2004, which
was the first year of the plan, the consolidated business organization was
enhanced as a part of our management restructuring efforts, promoting
“Production Innovation” intended to drastically reform the profit and cash
flow. During the term ended
March 2005, which was the
second year of the plan, we
added efforts for drastically
reforming our financial base and
capital structure on top of
activities that continued from
the previous year while
implementing a “Strategic
Investment” for new growth
and to significantly leap into the
future to promote the
enhancement of business
competitiveness and growth
strategy.
Of these four targets, from
the first mid-term business plan,
the “Resumption of Dividends”
was attained one year ahead of
schedule, while the prospect of
attaining the “Zero Net Debt”
and the “20% ROE” was
established. As for the “10%
Operating Profit Margin,”
however, adjustments had to be
made due to the dramatic
changes within the consumer electronics market environment, which were
not foreseen at the time the plan was formulated, as well as a broad
reorganization of the business structure and large-scale “Strategic
Investments” that were implemented in order to respond to such changes,
on top of the impact of the progressive appreciation of yen (with the US
Dollar exchange rate rising from JY118 per US$1 to JY105).
In response to the aforementioned course of events, we formulated our
second mid-term business plan, the “Value Creation Plan,” the first year of
which coincides with the final year of the first mid-term business plan, the
term ending March 2006. We started new activities for the expansion of our
corporate value through overall completion of the following profit base
reforms and capital structure reforms in the first year of the new plan.
฀
Shift final year of the “Excellent Kenwood Plan” to
the second mid-term business plan “Value Creation Plan”
2001/3 2004/32000/3
Net income margin
Operating profit margin
0
50
100
150
200
250
300
350
฀
8
12
-16
-12
-8
0
-4
4
2002/3 2003/3 2005/3 2006/3 Forecast
Sales
Billions of yen
First Mid-Term Business Plan
“Excellent Kenwood Plan”
14 Fiscal Year through March 2006