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To: PaulW who wrote (35463)	8/25/1998 12:36:00 PM
From: DiViT	Respond to of 50808

Pioneer unveils plan to double sales By Alexandra Harney in Tokyo 08/25/98 Financial Times London Edition Page 21 Copyright Financial Times Limited 1998 Pioneer, the troubled Japanese electronics group, yesterday unveiled a plan to remake its corporate image and double its sales by 2005 by developing digital televisions, video disc players and car navigation systems. The electronics group, which specialises in car stereos and laser-disc technology, aims to raise sales to Y1,200bn ($8.3bn) and after-tax earnings to Y55bn by 2005. It also hopes to raise its return on equity from 1.9 per cent last year to 10 per cent in the same period. Higher profitability would be achieved by developing new technologies, said Kaneo Ito, Pioneer president. The group aims to generate 40 per cent of sales from new products, including plasma display panels (PDPs) for digital televisions, digital video disc (DVD) video players, and digital satellite broadcasting equipment. He estimated that Y270bn of turnover would come from DVD products, Y120bn from PDPs, and Y120bn from car navigation systems and boxes for satellite television reception. In order to meet the return-on-equity target, Mr Ito proposed a 5 per cent reduction in administrative expenses and cost reductions at production plants in south-east Asia. He also said the group would spend Y15bn to improve production facilities for PDPs. Although sales have improved in spite of weak Japanese consumer demand, the heavy costs of restructuring have hurt profits recently. In the year to end-March, the company reported after-tax earnings of Y2.5bn, after restructuring charges led to losses of nearly Y10bn the year before. In the first quarter of this year, group profits plunged 82.7 per cent to Y177m, despite a 7.1 per cent growth in sales to Y139bn. However, the company's long-term prospects were strong, analysts said. Its position in the global DVD and car navigation system markets would contribute to improved profitability in the next three to five years, said Masashi Kubota, analyst at ING Barings in Tokyo. Pioneer has 50 per cent of the DVD market in the US, and 20 per cent of the Japanese market, according to ING Barings. "I think recent performance is just a short-term fluctuation . . . Pioneer is suffering from the high start-up costs of these businesses and it will reduce losses in the next few years," said Mr Kubota. He estimated that group profits would grow to Y45bn, on turnover of Y900bn, by 2005, as tough conditions in the industry narrowed the group's profit margins. With growing price competition in the consumer electronics market, Pioneer would need to lower its cost structure to compete with rivals Fujitsu, Sony and Matsushita, Mr Kubota said. * Pioneer and Canal Plus, the French pay-television company, have formed an alliance to manufacture and promote a new generation of digital television set-top boxes compatible with European and US standards, writes John Gapper. The link-up, which also includes C - Cube Microsystems and DiviCom, which makes components for cable television systems, will produce a complete system capable of receiving digital programmes and interactive services. The system is intended to comply with standards set by the Open Cable group in the US and the Digital Video Broadcasting Project, which includes about 200 broadcasters and official organisations involved in television.