Kenwood 2005 Annual Report Download - page 19

Setting of targets฀
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We have started activities intended for the attainment of the targets set, such as the performance forecasts for the term ending March 2006,
which is the first year of the second mid-term business plan and targets for the term ending March 2008, which is the final year of the plan.
The overall target for early entry into the Billion Dollar Club is sought by implementing a corporate value expansion strategy through the
promotion of growth and top ranking earning capacity of the industry as described above as well as through the promotion of a growth strategy
Furthermore, with the complete redemption of preferred stocks in the term ending March 2006, which is the first year of the plan and the
halving of the liability to provide retirement benefits through the completion of the reversion of the substituting role for the execution of welfare
annuity, combined with the overall finalization of the capital structural reorganization, the return to a sound balance sheet will be complete.
Strategic developments will then be enhanced along with sales organizations in the emerging markets with BRICs as the central element to
accelerate the implementation of the growth strategy and to further utilize the surplus funds in their entirety for reinvestment to business
operations, including M&A, while aggressively expanding the corporate value.
Numerical targets for the final year:
Fiscal year ending March 2008
Consolidated sales amount฀
The home electronics business will be restructured based on the benefits gained through the expansion of the growing businesses, car electronics
OEM business and car multimedia (consumer) business, as well as through the stable growth of the key businesses, car electronics consumer
(audio) business and wireless radio business with the aim for a consolidated sales amount of JY 220 billion, which is a growth by 20% in
comparison with the term ending March 2005.฀
Consolidated operating profit฀
We are aiming to achieve operating profit of JY15 billion (an operating profit margin of approximately 7%), which would be double that of the
term ending March 2005, by increasing the stable revenue base of the car electronics consumer (audio) business and wireless radio business, which
are our key businesses, as well as through reforming the profit structures of the growing businesses, car electronics OEM business and the car
multimedia (consumer) business, and restructuring of the home electronics business.฀
Net debt฀
We intend to proceed further with cash flow reforms by reducing inventory assets and other means to attain a “Zero Net Debt” and utilize surplus
funds for M&A as well as other business reinvestment purposes.
Further, the borrowed funds of about JY 30 billion will be considered our operating funds and utilized as short-term revolving funds.฀
ROE฀
A rate of 20% or more will be targeted for ROE in the final year of the plan by converting the financial base and capital structure into sound states,
expanding the net income for the current term through a growth strategy and by expanding our shareholders’ equity.
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Commencement of long-term strategic development with consideration for events following completion of
mid-term plan
Activities have begun for long-term strategic development over three years, capturing digital media
conversions฀
Exhibiting strengths of the only specialized manufacturer that contains three core businesses of car electronics business, home electronics business
and communications equipment business by enhancing a responsive ability for consumer businesses, in which there are rapid changes and by
capturing business opportunities from the developments of digital, network, wireless and multimedia technologies.
As a part of such efforts, we are aiming to proceed with activities to develop businesses that can contribute new added value to markets in
three years, which are appropriate for the business of “Mobile & Home Multimedia System,” implemented with Value Creation Division (VCD), an
organization that was newly established as of April 1, 2005, as the central element. Such efforts will involve the fusion of audio-visual technologies
nurtured over many years and cutting-edge digital and network technologies to realize a seamless connection between car electronics, home audio
and portable audio as well as promote networking with personal computers and the Internet.
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Kenwood Corporation Annual Report 2005