Alpine 2007 Annual Report Download - page 14

12
Consolidated Financial Review
Reviewing the world economy in the fiscal year ending March 31, 2007, despite concern
over effects of persistent high oil prices and declining housing investment, the US economy
maintained a fi rm trend. The European economy followed a recovery phase helped mainly by
an improved employment environment, while the earnings of exporting companies slowed due
to a stronger Euro.
On the other hand, the Asian economy continued with high growth driven by bullish export
industries in each country, yet some overheated phenomenon was witnessed in China as seen
in the stock investment.
The Japanese economy managed to maintain a stable growth mostly due to increased
consumer demand centering on digital home electric appliances such as flat-panel TVs,
expanded profi t of exporting companies helped by a cheaper yen as well as aggressive private
sector capital investment.
In the automobile industry, the demand shifted to fuel effi cient cars refl ecting oil price hikes,
which created a substantial performance gap between companies. While Japanese makers
expanded their market share, the US Big Three focusing on large cars struggled to survive.
In our car electronics industry, the market size has grown along with the increased factory
installation of integrated units in new cars with an emphasis on car navigation systems in
the midst of an accelerating introduction of car electronics and information communication
devices.
On the other hand, the after-market size tended to contract by the impact of increased
factory installation (systems), despite a sharp increase in the demand for new media such as
“iPod®”, products to respond to “terrestrial digital broadcasting”, and “portable navigation”
systems with diffusion conscious pricing in the US and European markets.
Under these circumstances, our group tried to secure orders by proposing state-of-the-art
technologies for car information & communication devices to major automobile makers in
Japan, the US and Europe.
We also displayed our products at a variety of global events such as motor shows and the
North American Consumer Electronics Show (CES) trying to impress Alpine brand which will
create “future value of mobile media”.
Furthermore, to cope with the requirement for local procurements of products by automobile
makers, we reinforced local personnel and increased investment in facilities at each production
base in Dalian and Taicang, in China, Hungary in Europe, and in Mexico. We also continued
active R&D investment, and promoted structural reforms of earnings and costs across the
group companies.
Performance by Segment
Audio Products
In this segment, sales of Alpine’s iPod®-LINK automotive CD players for the after-market and
car audio systems for BRICs market proved to be strong, but overall sales of such products
declined due to an intensifi ed price competition and contraction of the market.
With respect to sales to automobile manufacturers, while sales to European makers declined,
sales of “CD audio systems” addressed to global strategic cars of Japanese makers and “DVD
audio” were strong.
In the midst of the increasing diffusion of car information & communication devices, the trend
from single car audio products to integrated products centering on navigation systems has
been intensifi ed, and sales of this segment increased 0.2% compared with the previous fi scal
year.
Information and Communication Equipment
In this segment, we introduced the next generation navigation system called “Mobile Media
Station X07” to the Japanese domestic after-market at the end of November 2006. This
system is equipped with Bluetooth function and an iPod®-LINK function and is compatible with
the terrestrial broadcasting. This spearheading technology received high acclaim in the market,
but the sales faced diffi culty by the severe price competition with rival companies in the midst
of the Christmas campaign.
With respect to the portable navigation system “Blackbird” which was introduced in the North
American market at the start of the fi scal year, the sales failed to grow with the demand shifting
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