Kenwood 2004 Annual Report Download - page 19

capabilities to respond to the rapidly changing consumer electronics markets in
the world, develop new technologies, promote strategic joint-development, and
put the finishing touches on production innovations to increase its
competitiveness.฀
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Business strategy฀
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Car Electronics Business฀
Kenwood, an expert in the audio sector, will make great efforts to increase its
presence in the audio field, the Company's forte, and introduce new product lines
in the visual and digital broadcasting fields, which are rapidly growing.
Furthermore, the Company will launch a project, on which it will concentrate
entire resources, to develop proprietary technologies in order to create new
attractive automotive multimedia products.
In the OEM business, which has been developing rapidly thanks to the
cumulative efforts of many years, the share of multimedia products is high and
technical innovation is accelerating. Therefore, the Company will set up an
independent division for this business to develop new products, while promoting
strategies for further growth.฀
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Communications Business฀
Centered on the U.S. regional headquarters, the Company will further enhance
the cooperative system of marketing, sales, development and production, step up
digital radio devices while responding attentively to the digitalization wave, and
further promoting the shift from terminal device manufacturer to system provider.
The Company will expand operations in Asia, particularly China, where
spectacular growth is forecast, and regions such as East Europe, particularly
Russia, the Middle East, Latin America and Africa, where growth is forecasted. It
will also strengthen its domestic business by integrating the radio operations
acquired from Toyo Communication Equipment Co., Ltd. and strive to grow in the
global market, while maintaining high profitability.฀
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Home Electronics Business฀
Now that its earnings structure significantly improved thanks to a series of
restructuring and production innovations, the Company will promote a growth
strategy to realize the home multimedia operations that offer new added value to
the market. To this end, the Company will further develop the home electronics
business by putting emphasis on high-fidelity reproduction-it has traditionally
pursued as the core of audio entertainment-to create digital amplifiers and next-
generation network-based audio equipment.
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Earnings outlook—Aiming for the third straight year of
record income฀
For the year through March 2005, the second year of the three-year midterm
business plan "Excellent Kenwood Plan," the Company aims to post a record
consolidated net income for the third consecutive year. To achieve this, it will
enhance competitiveness and strongly promote its growth strategy, by
reorganizing its financial base, proactively making strategic investments, and
putting the finishing touches on its production innovations.
The Company expects consolidated net sales will rise 6.3% year-on-year to
190.0 billion yen, due to the effects of the introduction of new product lines
planned by every business.
Income is forecast to further improve, thanks to the ongoing reduction in costs
through production innovations. Despite a proactive strategic investment to
enhance competitiveness and promote a growth strategy, consolidated ordinary
income is estimated to be 8.5 billion yen, remaining unchanged from the fiscal
2003 (ended March 2004). Net income will likely increase year- on-year to 7.5
billion yen for the third consecutive year of record highs, due to less impact of an
extraordinary loss with restructuring already completed.฀
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Partial return of the employees' pension fund to the
government฀
The corporate pension fund has been granted a waiver of the obligation to handle
future disbursement of pension benefits from the Minister of Health, Labor and
Welfare on 1st April 2004, in association with the return to the state of the
assets, which the fund has been managing as a proxy for the state, based on the
Defined Benefit Corporate Pension Law.
The Company's retirement benefits obligation will be terminated and
gains/losses will be realized on the day when the portion for proxy disbursement
is returned to the state, in accordance with the provisions of Paragraph 44-2 of
the interim "Practical guidelines for the accounting of retirement benefits"
(Accounting Committee Report No. 13; the Japanese Institute of Certified Public
Accountants). It is forecast that such gains/losses will have little effect on the
financial results for fiscal 2004 (ending March 2005).
*1 Five core values are described on page 3.
*2 There is no change in the classification for accounts settlement of the three business
segments (car electronics, communications, and home electronics), despite the newly
established "4 Profit Center System."
Net sales
Operating income฀
Ordinary income฀
Net income
Outlook for fiscal year ending March 2005 (Millions of yen)
Outlook for
FY 2005 Year-on-year change
Results for
FY 2004
190,000
13,000
8,500
7,500
178,731
12,610
8,541
7,318
+11,269
+390
41
+182
Consumer Business Sector
Communications Division
Consumer Car Electronics Division
OEM Car Electronics Division
Home Electronics Division
Consumer Business Development Center
Speaker System Division
Cost Centers
Profit Centers
New Organization
Kenwood Corporation 19