Kenwood 2007 Annual Report Download - page 16

Results from investments in strategic development in Car Electronics business
Consumer (Audio) Business
Results from investments in
strategic development in
Communications Equipment business
Digital Land Mobile Radio
Consumer (multimedia) business OEM Business
Line-fitted car navigation system
16 Kenwood Corporation
Medium- and high-class models
featuring seamless integration with
digital media equipments
New systems that can expand
the functions of line-fitted AV
products
Terrestrial digital TV tuner
for Japanese market
New-concept car navigation
systems for overseas markets
(All-in-one type)
CD receiver with built-in memory
navigation system for mini and
subcompact cars
As for the Consumer business, given the market focus has shifted
from audio to multimedia for car electronics, Kenwood is forced to
make great efforts on the multimedia business, particularly car
navigation systems for overseas markets, for the growth strategy.
We will enhance our product line-up of new-concept car navigation
systems in overseas markets, make the results of such global
expansion apparent and implement a plan for putting this business
on a growth track.
In the OEM business, demand for components such as
DVD-/CD-drive mechanisms is expected to recover toward the end
of the fiscal year ending March 2008. Therefore, Kenwood will
focus on achieving excellent results from the launch of new
line-fitted models, selling dealer-option models and implementing a
plan for putting this business on a growth track.
The Communications Equipment business has achieved the goals of
the mid-term business plan one year ahead of schedule. Kenwood
will strive to achieve steady growth of this business by boosting
market introduction of Digital Land Mobile Radio equipments.
In addition, we will focus more on growth and development in
the PDC phones sales business.
In the Home Electronics business, Kenwood will launch new
premium products, make the results of enhanced line-up become
explicit by employing a long-tail strategy, and will implement a plan
Management Policy for the Fiscal Year Ending March 2008
The final stage of the mid-term business plan, the “Value Creation Plan”
——Reconstruction in current businesses and promotion of growth
strategies through business alliances and M&A
In May 2005, Kenwood formulated its “Value Creation
Plan,” the mid-term business plan, under which it set the
goals of consolidated net sales of JPY220 billion,
consolidated operating profit of JPY15 billion (with
operating profit ratio of 7%), zero net debt (effectively
debt-free management), and an ROE of 20% or higher.
Of these goals, Kenwood achieved the goal of an ROE of
20% or higher during the previous fiscal year, and
effectively achieved zero net debt as of the end of the
previous fiscal year.
With respect to net sales and earnings, the
Communications Equipment business has achieved results
far exceeding the initial plans. However, the Car
Electronics and Home Electronics businesses were severely
affected by the rapid changes in the consumer electronics
market environment characterized by increasing
tendencies toward digitization and multimedia and the
intensified competition that came with such changes.
These circumstances have made it difficult for Kenwood to
expect to achieve the goals of consolidated net sales of
JPY220 billion and consolidated operating profit of JPY15
billion (with operating profit ratio of 7%) and resulting by
current businesses.
However, investments in strategic development in its
current businesses and alliances with other companies,
which Kenwood poured its efforts and resources into, and
the implementation of growth strategy through M&A are
producing favorable results. In the fiscal year ending
March 2008, we will strive to make these results more
obvious. Furthermore, we will promote steady growth of
current businesses and accelerate our growth strategy
through business alliances and M&A.
Reconstruction and growth strategy in
current businesses
Car Electronics Business
Communications Equipment Business
Home Electronics Business