Management Outlook and Growth Strategy

2003.4.25.
FY03 Business Results
FY02
Profitable at consolidated
operating income level
in 2H
1
FY03
Profitable at both
consolidated operating
and net income level
Net sales ¥967.6bil..
Operating income ¥22.3bil..
Net income
¥6.3bil.
Forecast
Net sales ¥982.5bil.
Operating income
¥20.0bil.
Net income ¥6.0bil.
FY03 results
Profitable
Profitable at
at both
both consolidated
consolidated operating
operating and
and net
net income
income level
level （since
（since
FY98
FY98 after
after five
five years
years of
of operating
operating loss）
loss）
Good
Good performance
performance with
with consumer
consumer electronics
electronics business,
business, driving
driving force
force of
of
the
the company
company
Focusing on Priority Business Areas in FY03
Priorities
Priorities for
for FY03
FY03
Consumer
Consumer
Electronics
Electronics
Professional
Professional
Electronics
Electronics
Components
Components
&
& Devices
Devices
Software
Software
&
& Media
Media
2003.4.25.
2
FY03
FY03 results
results and
and tasks
tasks
1.
1. Global
Global organization
organization necessary
necessary to
to realize
realize the
the
optimization
optimization of
of development/production
development/production and
and
sales
sales locations
locations
2.
2. Reduction
Reduction of
of fixed
fixed costs
costs through
through employment
employment
structural
structural reform
reform
3.
3. Measures
Measures to
to strengthen
strengthen domestic
domestic sales
sales
organization
organization
4.
4. Centralization
Centralization of
of manufacturing
manufacturing at
at Yokosuka
Yokosuka
factory
factory to
to improve
improve productivity
productivity and
and quality
quality
1.
1. Second
Second display
display factory
factory in
in Mexico
Mexico in
in operation,
operation,
increasing
increasing production
production capacity
capacity
2.
2. Completed
Completed with
with the
the implementation
implementation of
of early
early retirement
retirement
program
program
3.
3. Domestic
Domestic sales
sales achieving
achieving 107%
107% YoY
YoY (market
(market increase
increase
by
by 101%)
101%)
4.
4. In
In progress,
progress, consolidating
consolidating manufacturing
manufacturing functions
functions at
at
Yokosuka:
Yokosuka: from
from decentralization
decentralization to
to centralization
centralization of
of
manufacturing
manufacturing process
process
1.
1. Accelerating
Accelerating the
the shift
shift to
to overseas
overseas production
production
(Goal:
(Goal: overseas
overseas production
production ratio
ratio of
of 40%)
40%)
2.
2. Focus
Focus on
on priority
priority businesses
businesses through
through structure
structure
reform
reform
3.
3. Decreasing
Decreasing the
the number
number of
of products
products from
from 1700
1700
to
to 1100
1100 which
which is
is half
half of
of the
the number
number in
in FY01
FY01
1.
1. Overseas
Overseas production
production ratio
ratio of
of 37%
37% by
by the
the end
end of
of FY03
FY03
2.
Focus
on
presentation
and
security
businesses
2. Focus on presentation and security businesses
Reinforcement
Reinforcement of
of sales
sales &
& marketing
marketing on
on prospective
prospective
system
business
activities
system business activities
3.
3. Number
Number of
of products
products reduced
reduced to
to 1400
1400 by
by the
the end
end of
of FY03
FY03
1.
1. Expansion
Expansion of
of Optical
Optical Pickup
Pickup and
and Motor
Motor business
business
2.
2. Global
Global organization
organization necessary
necessary to
to realize
realize the
the
optimization
optimization of
of development/production
development/production and
and
sales
sales locations
locations
3.
3. Reduction
Reduction of
of fixed
fixed costs
costs through
through employment
employment
structure
structure reform
reform
4.
4. Withdrawal
Withdrawal from
from Magnetic
Magnetic Head
Head business,
business,
reduction
reduction of
of Crystal
Crystal Oscillator
Oscillator Device
Device business
business
1.
1. Motor
Motor business
business achieved
achieved 104%
104% YoY,
YoY, Optical
Optical Pickup
Pickup
business
business in
in difficulty
difficulty
2.
2. Centralization
Centralization of
of deflection
deflection yoke
yoke manufacturing
manufacturing in
in overoverseas
seas
3.
3. Completed
Completed with
with the
the implementation
implementation of
of early
early retirement
retirement
program
program
4.
4. Withdrawal
Withdrawal from
from Magnetic
Magnetic Head
Head and
and Crystal
Crystal Oscillator
Oscillator
Devices
Devices businesses,
businesses, and
and closure
closure of
of Koriyama
Koriyama factory
factory
1.
1. Integration
Integration of
of two
two US
US disc
disc factories
factories into
into one
one
2.
2. Employment
Employment structure
structure reform
reform in
in Media
Media business
business
3.
3. Drastic
Drastic reform
reform of
of Film/Game
Film/Game business
business
4.
4. Improvement
Improvement of
of earning
earning power
power in
in Music
Music business
business
1.
1. Operation
Operation in
in suspension
suspension at
at Sacramento
Sacramento factory,
factory,
integration
integration of
of two
two US
US factories
factories into
into one
one
2.
2. Completed
Completed with
with the
the implementation
implementation of
of early
early retirement
retirement
program
program
3.
3. Withdrawal
Withdrawal from
from Film
Film business
business (production
(production and
and disdistribution)
tribution) and
and disposal
disposal by
by sale
sale of
of Game
Game business
business
4.
4. Implementation
Implementation of
of early
early retirement
retirement program
program at
at Victor
Victor
Entertainment
Entertainment and
and reorganization
reorganization of
of VE
VE related
related companies
companies
2003.4.25.
Lowering Breakeven Point
3
Aim to lower FY03 breakeven point to ¥500bil. → Achieved
Completion of Restructuring
Reorganization
Reorganization of
of
business
business
/business
/business base
base
-- Withdrawal
Withdrawal from
from Magnetic
Magnetic Head
Head and
and Crystal
Crystal Oscillator
Oscillator Devices
Devices
businesses
businesses
-- Withdrawal
Withdrawal from
from Film
Film business
business and
and reduction
reduction of
of Game
Game business
business
-- Integration
Integration of
of disc
disc production
production bases
bases in
in US
US
Employment
Employment
structure
structure reform
reform
Improve
Improve global
global competitiveness
competitiveness by
by implementing
implementing
domestic
employment
structure
domestic employment structure reform
reform
（Number
（Number of
of workforce
workforce reduced
reduced to
to 8200
8200 by
by the
the end
end of
of FY03）
FY03）
-- Completed
Completed with
with closure
closure of
of Koriyama
Koriyama factory
factory
-- Completed
Completed with
with disposal
disposal by
by sale
sale of
of Game
Game
business
business
-- Completed
Completed with
with operation
operation in
in suspension
suspension at
at
Sacramento
Sacramento factory
factory
Completed
Completed with
with number
number of
of domestic
domestic
workforce
reduced
to
8000
workforce reduced to 8000
Re-basing the business
Reduction
Reduction of
of
inventory
inventory
Reduction
Reduction of
of inventory
inventory turnover
turnover less
less than
than 30
30 days
days
by
by adopting
adopting SCM
SCM program
program
（Consolidated
inventory
to
38
（Consolidated inventory to 38 days
days by
by March
March 03）
03）
Reduction
Reduction of
of
procurement
procurement
costs
costs
Reduction
Reduction of
of procurement
procurement costs
costs to
to ¥39.3bil.
¥39.3bil.
Realignment
Realignment of
of
manufacturing
manufacturing
facilities
facilities
Implementing
Implementing goal
goal of
of completing
completing development
development
and
and manufacturing
manufacturing in
in 6-months
6-months
Clearly
Clearly shifting
shifting focus
focus of
of domestic
domestic plants
plants to
to consoliconsolidating
manufacturing
functions
at
Yokosuka
dating manufacturing functions at Yokosuka factory
factory
Reduced
Reduced to
to 42
42 days
days by
by the
the end
end of
of
FY03
（target
38
days）
FY03 （target 38 days）
Procurement
Procurement costs
costs reduced
reduced to
to
¥44.6bil.
¥44.6bil.
Completed
Completed by
by making
making Yokosuka
Yokosuka facfactory
tory as
as manufacturing
manufacturing center
center and
and
transfer
transfer manufacturing
manufacturing facilities
facilities to
to
Yokosuka
Yokosuka
Commitment to continued restructuring
2003.4.25.
F04 Business Forecast
FY02
Profitable at consolidated
operating income level
in 2H
4
FY03
Profitable at both
consolidated operating
and net income level
FY04
To continue increasing
sales and income
Acceleration of balance
sheet improvement
Net sales ¥967.6bil.
Operating income ¥22.3bil.
Net income
¥6.3bil.
F04 annual objective
Net sales ¥1000.0bil.
Operating income
¥25.0bil.
Net income
¥11.0bil
F04
◆
2002
basic
年度業績
policy
◎連結・単独ともに営業利益黒字化 （97年以来 5年ぶり）
To continue reform of awareness to re-birth the company, and
・
proceeding reform of business structure
◎民生事業健闘、全社の牽引役に
・To achieve higher market share with Only One products of five
priority business areas, and to improve the brand loyalty
・To continue increasing sales and income, to improve the rating,
and to accelerate raising funds and improving balance sheet
2003.4.25.
Further Reform of Business Structure
FY03
Cost
Creation
- Centralization of procurement functions
for consumer products
- To start reduction of domestic suppliers:
- Chinese components procurement :
establishment of laboratory center in
Shanghai
- Global procurement cost reduction to
¥44.6bil.
5
FY04 objectives
- Supplier policy for stable key device procurement
- Active promotion of undertaking subjects since FY03
（Value engineering activity/reduction of domestic suppliers
/development and procurement of chinese devices）
- Global procurement cost reduction to ¥37.1bil.
- Further promotion of design process reform（second year）
- Acceleration of the mother base of product manufacturing
project
- Reinforcement of mass production technology
Manufacturing
Reform
- Action of manufacturing in 6-months
- To start the mother base of product
manufacturing project
Logistics
Reform
- Reconsideration of logistics bases
・America： to start project to reduce bases
from 5 to 3
・Europe： to reduce north European bases
from 3 to 1
・Japan： to start project of settling new base
in Yokohama
- Implementation of reduction of logistics bases
・America： 5 in Mar.02, 4 in Mar. 04, and 3 within FY05
・Europe： By integrating bases for industrial electronics,
inventory of three local sales companies will be gathered to
one base
・Japan： To reduce 9 warehouses in Yokohama to 3
- Preparation of SCM system for
consumer electronics products
∼to make rules, to make expert section,
to build information system etc.
- SCM system for consumer electronics products in
operation/high turnover management by weekly control
SCM
construction
- To start logistics reform for consumer electronics products
Target ： (May ‘03) to start the operation with four factories in Japan and in Asia
(Sep.‘03) to start with six factories in America, Europe and in Asia
(completion with all factories for consumer electronics)
2003.4.25.
Basic Concept of Growth Strategies
6
Business vision
Create new ways to communicate through music and images
JVC will move people by high-definition images and high-quality sounds technology,
expanding the potential for creativity and offering a new way of communication.
Basic concept
To proceed differentiation strategy with Only One products of five priority
business areas, and to achieve the higher market share and to improve brand
loyalty. In consequence, with that high market share and the market prices
reasonable for the value of the product, we will generate high profit.
Five priority business areas
High-definition
displays
Digital
high density
storage
Network
AV system
C&D business
Software
& media
business
Worldwide Market Forecast of Priority Businesses
High-definition
displays
1,200
1,000
800
600
400
200
0
PDP
RPJ
（Unit:10k） Source: JVC
900
Source:JVC
800
LCD
700
600
500
400
300
200
2002
2003
2004
2005
（Unit:10k）
1200
7
Digital
high density
Storage（D-VHS and optical disc media） storage
PDP/PTV/LCD for CE market
（Unit:10k）
2003.4.25.
100
0
Source:JVC
2002
2003
DVD recorder(4.7GB)
1000
2004
2005
Next generation VDR(25GB)
2006
D-VHS
800
600
Network
AV system
400
200
DVC for CE market
0
2002
2003
2004
2005
2006
Digital and high quality
in all areas!
2003.4.25.
Main Products of Five Priority Business Areas
8
As a core product of HD (High
High-definition Definition) world, expand the sales
displays
with DET/DIST high definition
technology
Digital
High density
storage
Network
AV system
C&D
business
Software
& media
business
Newly introduced
LCD
Rear projection TV
D-VHS = As a high density recording system,
expand sales by differentiation strategy
Newly introduce DVD recorder into Japan,
America and Europe
Worldwide No.1 market share strategy
with DVC
Introduction of world-first HD camcorder
for consumer use
Expand strongly car AV business
Digital high vision VCR
with D-Theater
HM-DHX1
World first
HD camcorder
GR-HD1
To enter on a full scale into business of fluid dynamic
bearing motors for HDD and dualdual-wavelength
hologram optical pickups
Reinforcement of profitability of deflection yoke
business and its expansion for consumer products
use
To shift to digital media, and to expand sales
channel
To change the business composition from
package business to matrix management
including music related business
D-ILA projector
PDP
GR-DX95
Fluid dynamic bearing
motors for HDD
Newly introduced
DVD recorder
Receiver with
MP3 function
Dome style
Security camera
Dual-wavelength
hologram optical pickup
MINMI album titled “Miracle”
Southern All Starts
25th anniversary
MiniDV tape in HD
2003.4.25.
Priority Policy for FY04 by Region
9
＜Number indicated in () is vs FY03＞
- Regain DVC market share and expand sales with big screen TVs,
America
especially with projection TV
- Reinforce sales with regional big accounts (130%）
- Promote SCM and logistics reform
Europe
Asia
China
Japan
- Make differentiation with Only One products, and sales expansion
with EISA awarded products
- Reinforce partnership with key dealers
- Expand sales in south Europe（111%）, and Eastern Europe and
Russia（120%）
- Reinforce Middle East（132%）, Singapore（114%） and Korea（107%）
- Expand TV sales where market is growing
- Expand sales with camcorder（120%） and car AV（130%）
- Expand sales with HD world products
- Expand sales by introducing at a stretch growing three priority
business areas products (FPD/DVD/DVC)
- Achieve market share of 10% in FY05, by enhancing relationship
with “winning dealers” in the market
2003.4.25.
Technologies Supporting Priority Businesses
High-definition
displays
Digital
High density
storage
10
High quality picture technology: evolution of DIST (Digital Image Scaling Technology)
FY02：First
FY02：First generation→Improvement
generation→Improvement of
of resolution
resolution
FY03：Second
generation→Colour
management（improvement
FY03：Second generation→Colour management（improvement of
of colour
colour scale/reproductivity）
scale/reproductivity）
FY04:Third
generation→Available
for
PAL
TVs,
cost
reduction
and
FY04:Third generation→Available for PAL TVs, cost reduction and performance
performance improvement
improvement
→Further
→Further development
development
High quality sound technology: differentiation by CC/DD
Extended K2 technology / CC converter
2bit digital amp technology
Improve sound quality, developing original sound
Distortion ratio same as that of analog amp by new
reproduction technology in cooperation with music studio
system
DD speaker
Talking speed conversion technology
Compact design with high output power, and exceptionally Realization of slow but natural talking speed wide sound field
Network
AV system
High performance encoding technology:higher compression ratio, higher picture quality
JVC original algorism developed
developed to
to realize
realize high
high quality
quality picture
picture belonging
belonging within
within MPEG
MPEG standard
standard
LSI Development to
to realize
realize high
high picture
picture quality
quality by original algorism,
algorism, which
which can widely used
C&D
business
Software
& media
business
HD camera technology: original world first developed technology
1/3inch1.18 mega pixel progressive single CCD can
can record
record 525i/525p/750p
525i/525p/750p signals,
signals, high
high S/N,
S/N, high
high
sensitivity,
sensitivity, improved
improved dynamic
dynamic range
range
HD zoom lens unit optical
optical 10X
10X zoom
zoom lens
lens unit
unit which
which realizes
realizes high
high picture
picture quality
quality in
in all
all zoom
zoom ratio
ratio
Manufacturing and mass production technologies:supporting high quality for hardware
&software ・Original
・Original sleeve
sleeve processing
processing system
system for
for FDB
FDB ・Self
Self production
production of
of hologram
hologram for dual-wavelength
dual-wavelength optical
optical pickup
pickup
・High
High density
density recording
recording layer
layer formation
formation and
and injection
injection technology
technology
2003.4.25.
Digital HD World
11
2004
2003
High-definition
displays
PDP equipped with DIST
Digital
High density
storage
D-VHS Digital
Hi-Vision VCR
To start ILA business on a full scale
Realization of
HD world
Realization of digital
HD network
Network
AV system
Differentiation
by high quality sound
C&D
business
Adding value
to the
products
Software
& media
business
Creating
synergy with
value chain
Business with
Hi-Vision Optical
Wireless Communication
Digital Hi-Vision Camera
Dual-wavelength hologram
optical pickup business
Blu-ray dual-wavelength
Hologram pickup business
Broadcasting in HD digital
Contents in HD
Network Server
Supporting HD
with components
Supporting ＨＤ
with softmedia
Media in HD
Brand Statement
2003.4.25.
The Perfect Experience
To create truly moving experience and provide
total satisfaction for our customers
12