MAY 2008 W3 ALERTPioneer Feels the Pain as It Slims Down Operations
Company to Close Two Plants and Cut 2,000 Jobs
<Nikkei-TOKYO><May 14, 2008>Pioneer Corp. made several announcements over the last three days laying out its plans to cut costs and restructure its operations in light of its Fiscal 2007 results announced Tuesday showing a net loss of ¥17.99 billion (approximately $179 million) or 167% more than last years ¥6.7 billion loss. Sales dropped 3% to 774.4 billion. This will be the fourth straight year of losses for the company.
To make matters worse, the company projects another drop of 36% in operating profits for the current fiscal year…a clear sign core businesses are struggling. This projection includes a ¥15 billion “structural reform” charge and anticipates a ¥19 billion loss this year.
In order to turn its operations around, Pioneer will shut two of its three plasma production facilities in Japan. By next March, Pioneer will exit the plasma panel manufacturing business, selling it to Matsushita Electric Industrial Co.
As part of the restructuring plan, the company expects to pare a total of 2,000 jobs and will soon begin a program for early retirement.
Investors pummeled the stock with shares dropping 18% closing at ¥909 in Tokyo compared to a drop of .1% for the Nikkei index of Tokyo blue chips.
Major brokerage houses Credit Suisse and Mitsubishi UFJ Securities cut their ratings on Pioneer’s stock. Deutsche Bank maintained a “hold” rating saying it was “disappointed the firm could come up with only a plan to cut fixed costs and no growth strategy.”