Pioneer Corporation today announced its consolidated third-quarter and nine-month business results for the period ended December 31, 2016.
Consolidated Financial Highlights
Consolidated Business Results
For the third quarter of fiscal 2017, the three months ended December 31, 2016, consolidated net sales declined 15.8% year on year, to ¥98,405 million, mainly from the negative effects of the Japanese yen’s appreciation, as well as a decrease in sales of Car Electronics, mainly in OEM business.
Operating income was ¥1,875 million, due to a decrease in selling, general and administrative (SG&A) expenses and an improvement in the cost of sales ratio, despite a decrease in net sales. Net loss attributable to owners of Pioneer was ¥3,994 million, compared with a net income of ¥245 million for the third quarter of fiscal 2016. This was mainly due to a foreign exchange loss of ¥2,295 million, an increase of ¥1,920 million year on year, and restructuring costs of ¥1,216 million associated with restructuring in overseas and a ¥1,152 million loss from the transfer of the cable TV system-related equipment business, each of which was recorded as an extraordinary loss, despite an increase in operating income.
During the third quarter of fiscal 2017, the average value of the Japanese yen rose 11.2% against the U.S. dollar year on year, to ¥109.30=1 U.S. dollar, and increased 12.9% against the euro, to ¥117.78=1 euro.
Car Electronics sales declined 13.5% year on year, to ¥78,248 million, due to a decrease in sales of OEM business and the negative effects of the Japanese yen’s appreciation. Sales of consumer market business declined, due to the negative effects of the Japanese yen’s appreciation. Sales of car audio products fell, mainly because of a decrease in North America and Europe, owing to a stronger yen, despite higher sales in Central and South America. Car navigation system sales increased in Europe, but sales decreased overall as a result of the negative effects of the Japanese yen’s appreciation.
Sales of OEM business declined. Sales of car audio products fell, because of a decrease overseas, primarily in North America, mainly reflecting a stronger yen, despite higher sales in Japan. Car navigation system sales decreased mainly from lower sales in Japan and emerging markets, despite higher sales in North America. OEM business sales accounted for 57% of total Car Electronics sales, compared with 61% a year earlier. By geographic region, sales in Japan decreased 16.9%, to ¥29,353 million, and overseas sales decreased 11.4%, to ¥48,895 million. Operating income increased 19.2% year on year, to ¥2,006 million, due to a decrease in SG&A expenses and an improvement in the cost of sales ratio owing ton foreign exchange rate movements, despite a decrease in sales.
In the Others segment, sales declined 23.6% year on year, to ¥20,157 million. Sales increased in factory automation systems, but decreases in sales of home AV products and optical disc drive-related products, and the negative effects of the Japanese yen’s appreciation, led to an overall decline.
By geographic region, sales in Japan decreased 19.5%, to ¥10,221 million, and overseas sales decreased 27.3%, to ¥9,936 million. The segment’s operating income increased to ¥264 million, compared with ¥42 million for the third quarter of fiscal 2016, due to an improvement in the cost of sales ratio and a decrease in SG&A expenses mainly owing to foreign exchange rate movements, despite a decrease in sales.
For the nine months ended December 31, 2016, consolidated net sales declined 14.9% year on year, to ¥288,802 million, primarily from the negative effects of the Japanese yen’s appreciation, as well as a decrease in sales of Car Electronics, mainly in OEM
business. Operating income declined 11.8% year on year to ¥3,391 million. This was due to a decline in net sales, despite a decrease in SG&A expenses mainly owing to foreign exchange rate movements and an improvement in the cost of sales ratio. Net loss attributable to owners of Pioneer was ¥3,028 million compared with a net loss of ¥1,749 million in the corresponding period of fiscal 2016. This was mainly due to a decrease in operating income, and restructuring costs of ¥1,443 million associated with restructuring in overseas and a ¥1,152 million loss from the transfer of the cable TV system-related equipment business, each of which was recorded as an extraordinary loss.
During the nine months ended December 31, 2016, the average value of the Japanese yen increased 14.1% year on year against the U.S. dollar, to ¥106.63=1 U.S. dollar, and rose 13.8% against the euro, to ¥118.02=1 euro.
Notes:
1. Operating income in each business segment represents operating income before elimination of
intersegment transactions.
2. From fiscal 2017, map software, previously classified in “Others,” is reclassified in “Car
Electronics.” Figures for the third quarter of fiscal 2016 have been reclassified accordingly.
Consolidated Financial Position
Total assets as of December 31, 2016 were ¥291,671 million, a decrease of ¥6,341 million from March 31, 2016, mainly due to decreases in trade receivables and cash and deposits, despite an increase in intangible assets and inventories. Intangible assets increased ¥9,489 million, to ¥56,449 million, mainly reflecting an increase in software in progress. Inventories increased ¥4,709 million, to ¥57,546 million, due to an increase in inventories primarily in consumer market car audio products. Meanwhile, trade receivables decreased ¥10,785 million, to ¥63,811 million, mainly reflecting lower sales for the third quarter of fiscal 2017 compared with sales for the fourth quarter of fiscal 2016. Cash and deposits decreased ¥6,855 million, to ¥45,138 million.
Total liabilities were ¥203,297 million, a ¥4,229 million decrease from March 31, 2016. This was primarily due to a decrease in trade payables of ¥3,928 million, mainly owing to a decline in purchases, and a decrease of ¥1,681 million in accrued pension and severance costs, despite an increase of ¥3,118 million in borrowings. Total equity was ¥88,374 million, a ¥2,112 million decline from March 31, 2016. This mainly reflected a recording of ¥3,028 million in net loss attributable to owners of Pioneer for the first nine months of fiscal 2017 and a ¥621 million decrease in foreign currency translation adjustments, despite a ¥2,058 million increase in defined retirement
benefit plans.
Cash Flows
During the nine months ended December 31, 2016, operating activities provided net cash in the amount of ¥17,495 million, an increase of ¥10,263 million compared with the same period a year ago. This was mainly due a ¥10,442 million decrease in trade receivables compared with an increase of ¥1,731 million in the same period a year ago, and a ¥8,773 million decline in the amount of a decrease in accrued expenses, primarily due to the payment of special retirement benefits in the first quarter of fiscal 2016, despite a ¥4,014 million decrease in trade payables compared with an increase of ¥2,406 million in the same period a year ago.
Investing activities used net cash in the amount of ¥27,120 million, a ¥6,465 million increase year on year, mainly from a ¥4,862 million increase in the purchase of noncurrent assets.
Financing activities provided net cash in the amount of ¥2,692 million, a decrease of ¥7,533 million compared with the same period a year ago. This was mainly due to a ¥15,073 million inflow from the issuance of convertible bonds during the same period a
year ago, although net proceeds of borrowings were recorded, compared with net repayments in the same period a year ago.
Foreign currency translation adjustments on cash and cash equivalents were a positive ¥78 million, compared with a negative ¥1,051 million in the same period a year ago. As a result, cash and cash equivalents as of December 31, 2016, totaled ¥45,138
million, a ¥6,855 million decrease from March 31, 2016.
Business Forecasts for Fiscal 2017
Net sales in the consolidated business forecasts for fiscal 2017, ending March 31, 2017, have been revised from the previous forecast announced on August 5, 2016, as shown below.
We have revised the net sales forecasts for fiscal 2017 downward by ¥10 billion, mainly reflecting weak car OEM orders. The forecasts for operating income, ordinary income and net income attributable to owners of Pioneer remain unchanged from the previous forecasts.
The yen–U.S. dollar exchange rate assumption for the fourth quarter of fiscal 2017 is ¥110, a depreciation of ¥5 from the previous assumption, while the yen–euro exchange rate assumption is ¥120, a depreciation of ¥5 from the previous assumption.
