JVC 2003 Annual Report Download - page 6

Victor Company of Japan, Limited
04 Annual Report 2003
A Fundamental Change in Approach
I have now served as the president of JVC for two years. In that time, we launched a range of bold reforms designed
to build a robust corporate structure that will serve JVC well into the future. In the previous fiscal year, the first year
of our reform program, we gave priority to building a healthy financial base by dealing with underperforming assets
that had a negative impact on results. This led to a substantial net loss in the previous year. During fiscal 2003,
though, supported by a stronger financial position, we made real progress in realigning our operating structure and
turning the company around. Our efforts included reforming JVC’s employment structure and improving core elements
of our day-to-day operations by reviewing operating bases, and reorganizing our manufacturing, purchasing, retailing
and logistics networks using cross functional teams. This resulted in a more robust earnings structure by reducing
fixed assets and inventories, and improving working capital. Our management approach is now more focused, and
results for the year reveal that we pared back total assets by more than ¥100 billion. In conjunction with these steps,
improvements that eliminate inefficiencies in our core product cycle—from research and development right through
to manufacturing and retailing—meant we could rapidly and accurately launch a range of 75th anniversary com-
memorative products incorporating our renowned technological strengths and innovative product design. These im-
provements won plaudits from customers, demonstrating how we have successfully created a virtuous cycle.
An Evolving JVC
In fiscal 2003, net sales rose 1.4% or ¥13.5 billion to ¥967.6 billion, representing our best-ever sales performance.
We also posted an increase in operating income of ¥34.4 billion, to ¥22.3 billion, reversing the operating loss of
¥12.1 billion in the previous year. Moreover, JVC returned to bottom-line profitability, recording net income of ¥6.3
billion. This represented a significant ¥50.9 billion improvement on the previous year’s net loss of ¥44.6 billion.
Despite these results, our reforms are still underway and there is much left to do to ensure a robust and sustained
turnaround. We stand at the start line of a more fundamental revolution at JVC that will see greater employee involve-
ment in management, complete reform of our management framework, and the creation of a powerful earnings
structure based on a lineup of high value-added products. Change is already underway, including revitalizing our
corporate culture. In the past, each organization within JVC was more likely to prioritize its own objectives, leading to
a lack of cooperation among internal business units. Now, however, due to reforms enacted over the past two years,
JVC employees are more likely to look at the bigger picture and make decisions that benefit the company as a whole.
This new mindset is changing the company and enabling us to eliminate practices that held back profitability, as well
as allowing us to deal with gaps and waste in our organization. Moreover, as we seek to become a high performance
global company, progress in revitalizing our corporate culture underpins our ongoing preparations to move into new
fields where we can leverage our core strengths. Indeed, entering new fields, something I will personally oversee, will
be key to ensuring the future growth of JVC.
Products too, are vital to our future. Based on our vision of creating new ways to communicate through music and
images, we strive to manufacture high value-added products to win greater market share and generate profits that
reflect our products’ enhanced value. A new system underpins this approach that allows us to launch products more
efficiently and accurately, thanks to a complete overhaul of our core product cycle, from production right through to
retailing. This system is now settling down, and will play a crucial role in generating “Only One” products designed to