02 15-14 pioneer results-q3-1

Pioneer Corporation

Business Resultsfor Third Quarter of Fiscal 2014

Susumu Kotani, President and CEOFebruary 12, 2014

1. Business Results for Third Quarter of FY2014: Operating income in the third quarter exceeded our

projection. On a year-on-year basis, net sales increased and operating income returned to profitability.

2. Business Forecasts for FY2014: Forecasts for the full year (net sales of 505.0 billion yen,

operating income of 10.0 billion yen, and net income of 0.5 billion yen) are unchanged.

Main Points of Today’s Presentation2

Today’s Agenda

3

1. Business Results for Third Quarter of FY20142. Business Forecasts for FY2014

Cautionary Statement with Respect to Forward-Looking StatementsStatements made in this presentation with respect to our current plans, estimates, strategies and beliefs, and other statements that are not historical facts are forward-looking statements about our future performance. These statements are based on management’s assumptions and beliefs in light of the information currently available to it. We caution that a number of important risks and uncertainties could cause actual results to differ materially from those discussed in the forward-looking statements, and therefore you should not place undue reliance on them. It is not our obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. We disclaim any such obligation. Risks and uncertainties that might affect us include, but are not limited to: (i) general economic conditions in our markets, particularly levels of consumer spending, and levels of demand in the major industrial sectors which we serve; (ii) exchange rates, particularly between the Japanese yen and the euro, the U.S. dollar, and other currencies in which we make significant sales or in which our assets and liabilities are denominated; (iii) our ability to continuously design and develop and win acceptance for our products in extremely competitive markets; (iv) our ability to successfully implement our business strategies; (v) the success of our joint ventures, alliances and other business relationships with third parties; (vi) our ability to access funding; (vii) our continued ability to devote sufficient resources to research and development, and capital expenditure; (viii) our ability to ensure the quality of our products; (ix) conditions in which we are able to continuously procure key parts essential to our manufacturing operations; and (x) the outcome of contingencies.

4

1. Business Results for Third Quarter of FY2014

(billion yen)

Consolidated Results for Third Quarter & Nine Months of FY2014

5

Third Quarter Nine Months

FY2014 Prior Year % to Prior Year FY2014 Prior Year % to Prior

Year

Net Sales 126.3 104.5 120.8% 362.6 329.1 110.2%

Operating Income/Loss 2.8 -1.8 - 3.3 1.4 240.5%

Ordinary Loss -0.1 -2.9 - -2.1 -2.1 -

Net Loss -1.7 -2.3 - -6.7 -9.8 -

AverageCurrency

Rate

1 US$ 100.46 81.17 +19.2% 99.39 80.00 +19.5%

1 Euro 136.69 105.25 +23.0% 132.23 102.17 +22.7%

Net Loss per Share -4.76 -7.03 +2.27 -19.01 -30.39 +11.38

ROE -8.2% -11.7% +3.5% -10.9% -15.8% +4.9%

Book-value per Share 238.46 249.53 -11.07

ROA -2.1% -2.9% +0.8% -2.7% -4.1% +1.4%

(yen)

(yen)

Operating Income/Loss Structure Breakdown for 3Q, Compared to FY13/3Q

(billion yen)

Increase of 4.5 billion yenFY13/3Q

OperatingLoss

FY14/3QOperating

Income

Improvement in Cost of Sales

Ratio

Impact ofCurrency Exchange

Increase inSG&A

6

-1.8 +0.5 -0.6 +2.8-0.4

Higher Profit Due to Increase

in Net Sales

+1.7 +3.4

Reduction of Fixed Costs

through Restructuring Measures

OEM Ratio to Net Sales: 54% (FY13/3Q: 52%)< Net Sales >

% to Prior Year 126% (Japan 119%, Overseas 131%)

Increase Factors OEM car audio products, consumer-market car audio products, OEM car navigation systems, and consumer-market car navigation systems

< Operating Income >

Year-on-Year Increase of 2.1 billion yen

Positive Factors Higher profit due to increase in net sales (+1.8 billion yen), and improvement in cost of sales ratio (+1.7 billion yen)

Negative Factors Impact of currency exchange (-1.1 billion yen), and increase in SG&A (-0.2 billion yen)

Note : Operating income by segment represents figures prior to elimination of transactions among segments.

Main products are:Car navigation systems, Car stereos, Car AV systems, and Car speakers.

Quarterly Net Sales & Operating Income: Car Electronics

Net Sales

Operating Income

(billion yen)

FY13/3Q FY14/3Q

49.8Overseas

38.1

36.3

Japan30.5

68.6

86.2

0.6 2.7

7

Overseas17.9

21.4

Japan6.9

8.0

29.4

24.8

0.4

-1.7

Main products are:Audio systems, Audio components, DJ equipment,Equipment for cable-TV systems, Blu-ray Disc players, Blu-ray Disc drives, DVD players, DVD drives, and AV accessories.

< Net Sales >

% to Prior Year 118% （Japan 116%, Overseas 119%)

Increase Factors DJ equipment, and equipment for cable-TV systems

Decrease Factor Optical disc drive-related products

< Operating Income/Loss >

Decrease in SG&A (+1.6 billion yen), impact of currency exchange (+0.5 billion yen), and higher profit due to increase in net sales (+0.1 billion yen)

Positive Factors

Year-on-Year Improvement of 2.1 billion yen

Negative Factor Worsening of cost of sales ratio (-0.1 billion yen)

Quarterly Net Sales & Operating Income/Loss: Home Electronics

8

Net Sales

(billion yen)

FY13/3Q FY14/3Q

Note : Operating income/loss by segment represents figures prior to elimination of transactions among segments.

Operating Income/Loss

Main products and services are:Factory automation systems, Speaker units, Electronic devices and parts, Organic light-emitting diode displays, Telephones, Business-use AV systems, Electronic manufacturing services (EMS), Map software, and Licensing of patents related to laser optical disc technologies.

< Net Sales >


Increase Factor Electronic devices and parts

Decrease Factors Factory automation systems, and EMS


Positive Factor Improvement in cost of sales ratio (+0.6 billion yen)

Negative Factors Increase in SG&A (-0.2 billion yen), and lower profit due to decrease in net sales (-0.1 billion yen)

Quarterly Net Sales & Operating Loss: Others

9

Operating Loss

Net Sales

(billion yen)

FY13/3Q FY14/3Q

Note : Operating loss by segment represents figures prior to elimination of transactions among segments.

< Operating Loss >

Overseas3.7 3.5

Japan7.4

7.2

10.711.1

-0.4-0.8

FY14/3Q compared to prior yearYen basis: 119%Local currency basis: 93%

Increase FactorsConsumer-market car audio products, DJ equipment, AV systems, and audio components

Decrease FactorDVD players

(billion yen)


Increase FactorsCar audio products bothin consumer market and OEM, audio components, and DJ equipment

Decrease FactorMap software

FY14/3Q compared to prior year115%

Increase FactorsOEM car navigation systems, OEM car audio products, opticaldisc drive-related products, andequipment for cable-TV systems

Decrease FactorFactory automation systems


Increase FactorsCar audio products bothin consumer market and OEM, electronic devices and parts,and DJ equipment

Decrease FactorOptical disc drive-related products

Quarterly Net Sales by Geographic Segment

10

North AmericaJapan

Europe Other Regions

51.644.8

0

20

40

60

80

FY13/3Q FY14/3Q

17.514.7

0

10

20

30

FY13/3Q FY14/3Q

25.221.1

0

10

20

30

FY13/3Q FY14/3Q

32.023.8

0

10

20

30

40

FY13/3Q FY14/3Q

11

(billion yen)

Third Quarter of FY2014: Summary of Consolidated Statements of Cash Flows

Third Quarter Nine Months

FY2014 FY2013 FY2014 FY2013Income (loss) before income taxes and minority interests -0.4 -1.8 -3.3 -7.5

Depreciation and amortization 6.4 6.5 18.9 18.8

Increase (decrease) in accrued pension and severance costs 0.2 -0.1 0.7 0.9

Decrease in provision forrestructuring costs - - -6.2 -

Loss (gain) on impairment of investment securities - -1.1 - 4.7

Decrease (increase) in trade receivables 6.0 9.1 2.5 15.0

Decrease (increase) in inventories -5.2 -6.7 -3.1 -18.5

Increase (decrease) in trade payables -0.3 -4.6 20.7 -12.6

Increase (decrease) in accrued expenses 1.2 -7.2 -0.2 -6.5

Others 1.6 2.9 -4.1 4.1

Cash flows from operating activities 9.5 -2.9 25.9 -1.6

Cash flows from investing activities -6.3 -5.7 -18.6 -24.0

Cash flows from financing activities -0.4 5.1 6.6 8.7

Foreign currency translation adjustments on cash and cash equivalents 1.5 2.1 2.0 0.6

Free cash flows 3.2 -8.6 7.3 -25.7

Net increase/decrease in cash and cash equivalents 4.3 -1.4 16.0 -16.4

Balance of cash and cash equivalents 36.9 29.5

Net cash balance -57.9 -67.2

9.5

5.3

11.2

2.8

-2.9

-6.3

-5.8

-6.5

-11.

2

-5.7

3.2

-8.6 -8.4

4.7

-0.5

FY13/3Q FY13/4Q FY14/1Q FY14/2Q FY14/3Q

Cash Flows from Operating Activities

Cash Flows from Investing Activities

Free Cash Flows

Third Quarter of FY2014: Inventories

12

(billion yen)

(turnover days)

75.678.1 84.776.588.3

5660

64

53

76

'12/12 '13/03 '13/06 '13/09 '13/12

144.7Overseas

118.4

109.0

Japan109.2

227.6

253.7

8.7

5.6

0

100

200

300

0

10

20

13

0


Nine Months of FY2014 : Net Sales & Operating Income/Loss by Segment

Car Electronics Home Electronics Others(billion yen)

Net Sales

Operating Loss

Net Sales

Operating Income

Net Sales

Operating Loss

56.9Overseas

47.1

21.7

Japan22.0

69.0

78.6

-4.7-0.6

-20

20

60

100

-5

5

15

25

11.2Overseas

12.9

19.1 Japan

19.6

32.530.3

-1.5 -1.4

-10

10

30

50

-2

2

6

10

0 0 0

FY131-3Q

FY141-3Q

FY131-3Q

FY141-3Q

FY131-3Q

FY141-3Q

2. Business Forecasts for FY2014

14

293.0292.0Overseas250.1

212.0213.0Japan201.7

505.0

451.8

505.0

10.0

6.010.0

FY13Results

FY14PreviousForecasts

FY14Current

Forecasts

15

Consolidated Business Forecasts for FY2014

Forecasts Prior-yearResults

% to Prior Year

Net Sales 505.0 451.8 111.8%

Operating Income 10.0 6.0 166.8%

Ordinary Income 5.0 0.8 615.8%

Net Income/Loss 0.5 -19.6 -


CurrencyRate

1 US$ 100 83.10

1 Euro 135 107.14


To Prior Year

Net Income/Loss per Share 1.42 -60.90 +62.32

ROE 0.6% -24.4% +25.0%

Book-value per Share 217.17 237.97 -20.80

ROA 0.2% -6.2% +6.4%

(yen)

Note :In case of 1 yen depreciation against US$ and euro, remaining 3 months impact on: Net sales: US$: 620 million yen / euro: 130 million yen; Operating income: US$: -160 million yen / euro: 60 million yen.

(billion yen)

Net Sales

Operating Income

To Achieve Fourth Quarter Projections

16

Fourth quarter projections: net sales of 142.4 billion yen and operating income of 6.7 billion yen

(＋) - Increased Car Electronics sales, reflecting special demand before the April 2014 consumption tax increase in Japan, and solid sales of high-margin consumer-market car audio products, mainly in emerging markets

- Increased sales of high-margin DJ equipment from release of new products

- Reduction of fixed costs through restructuring

(－) - Weak demand for optical disc drive-related products from effect of market contraction

Operating Income Structure Breakdown for 4Q, Compared to FY13/4Q

+4.6 +3.0 +2.7 -0.5 +6.7-6.8 +3.6

17

Improvement inCost of Sales

Ratio


Increase inSG&A


in Net Sales




Operating IncomeResult

FY14/4QOperating Income

Forecast

(billion yen)

+2.8 +3.6 +2.7 -0.0 +6.7-2.6 +0.2

Operating Income Structure Breakdown for 4Q, Compared to FY14/3Q

18

Improvement inCost of Sales

Ratio


Increase inSG&A


in Net Sales



(billion yen)


Operating IncomeResult

FY14/4QOperating Income

Forecast

Forecasts for FY2014: Car Electronics(billion yen)

OEM Ratio to Net Sales: 54% (FY13: 51%)< Net Sales >

% to Prior Year 113% (Japan 105%, Overseas 119%)

Increase Factors OEM car navigation systems, and car audio products both in OEM and consumer market

Net Sales

Year-on-Year Increase of 0.2 billion yen

Positive Factors Higher profit due to increase in net sales (+1.9 billion yen), and improvement in cost of sales ratio (+0.8 billion yen)

Negative Factors Increase in SG&A (-1.3 billion yen), and impact of currency exchange (-1.3 billion yen)

< Operating Income >

FY13Results

FY14 Current Forecasts

Car navigation systems 904 835

Car CD players 8,043 8,150

(thousand units)< Shipment to Consumer Market >

Note : Operating income by segment represents figures prior to elimination of transactions among segments.

Operating Income

200.0199.0Overseas167.6

152.0153.0

Japan145.0

312.6

352.0352.0

(5.0)10.09.8 10.0

FY13Results


FY14Current

Forecasts

Restructuring Effect

19

Overseas65.4

75.7 76.8

32.233.3

Japan30.5

109.0 109.0

95.9

(3.0)1.0

-2.8

1.0

Forecasts for FY2014: Home Electronics

Net Sales

(billion yen) < Net Sales >


Increase Factors DJ equipment, equipment for cable-TV systems, and home AV products

Decrease Factor Optical disc drive-related products

< Operating Income/Loss >


Positive Factors Improvement in cost of sales ratio (+2.6 billion yen), and impact of currency exchange (+1.9 billion yen)

Negative Factors Lower profit due to decrease in net sales (-0.6 billion yen), and increase in SG&A (-0.1 billion yen)


Operating Income/Loss

FY13Results


FY14Current

Forecasts


20

Forecasts for FY2014: Others

FY14 PreviousForecasts

(billion yen)

Net Sales

Note : Operating loss by segment represents figures prior to elimination of transactions among segments.

< Net Sales >


Increase Factors Electronic devices and parts, and speaker units

Decrease Factors Factory automation systems, and EMS

< Operating Loss >

Year-on-Year Worsening of 0.1 billion yen

Positive Factor Electronic devices and parts

Negative Factors Factory automation systems, and map software

Operating Loss

FY13Results

FY14 Current

Forecasts

16.217.3Overseas

17.1

Japan26.3

26.7 27.8

43.3 44.044.0

(1.0)

-1.0-0.9 -1.0


21

127.5106.0

0

50

100

150

FY13Results

FY14Current

Forecasts

65.554.4

0

20

40

60

80

FY13Results

FY14Current

Forecasts

89.7100.0

0

50

100

FY13Results

FY14Current

Forecasts

212.0201.7

0

100

200

300

FY13Results

FY14Current

Forecasts

(billion yen)

Forecasts for FY2014: Net Sales by Geographic Segment

North AmericaJapan

Europe Other Regions

FY14 compared to prior yearYen basis: 112%Local currency basis : 94%

Increase FactorsCar audio products bothin consumer market and OEM, OEM car navigationsystems, and DJ equipment

Decrease FactorHome AV products

FY14 compared to prior year105%

Increase FactorsOEM car navigation systems, OEM car audio products, and equipment for cable-TVsystems

Decrease FactorsConsumer-market car navigation systems, and optical disc drive-related products

FY14 compared to prior yearYen basis: 120%Local currency basis : 104%

Increase FactorsCar audio products both in consumer market and OEM,OEM car navigation systems,DJ equipment, and home AV products

Decrease FactorOptical disc drive-related products

FY14 compared to prior yearYen basis: 120%Local currency basis: 100%

Increase FactorsCar audio products both in consumer market and OEM,DJ equipment, and home AVproducts

Decrease FactorNot applicable

22

24.822.123.830.0

35.0(19.7)

FY10Result

FY11Result

FY12Result

FY13Result

FY14Current

Forecast

24.629.839.3 25.427.0(18.9)

FY10Result

FY11Result

FY12Result

FY13Result

FY14Current

Forecast

36.0 33.0 34.6 33.730.0(19.4)

5.97.5

8.27.2 7.9

FY10Result

FY11Result

FY12Result

FY13Result

FY14Current

Forecast(Nine-month

result)

Forecasts for FY2014:Inventories, R&D Expenses, Capital Expenditures, Depreciation & Amortization

(billion yen)Inventories R&D Expenses

(turnover days) (% to net sales)

Capital Expenditures Depreciation and Amortization

(Nine-month result)

(Nine-month result)

66.959.655.176.5 70.0

445047

43

56

FY10Result

FY11Result

FY12Result

FY13Result

FY14Current

Forecast

23

Notes:1. “Cash Flows from Investing Activities” and “Cash and Deposits” include time deposit over three months. 2. Equity in FY2014 includes the anticipated recording of unrecognized pension obligations based on accounting standards for retirement benefits.3. D/E Ratio = Debt ÷ (Equity – Minority Interests)

Forecasts for FY2014: Cash Flows and Financial Data

FY2013Results


FY2014Current

Forecasts

Cash Flows from Operating Activities 1.2 34.0 29.0

Cash Flows from Investing Activities -35.2 -31.5 -25.5

Cash Flows from Financing Activities 7.0 4.5 -0.5

Free Cash Flows -34.1 2.5 3.5

FY2013 Results


FY2014Current

Forecasts

Equity 81.6 79.0 85.0

Equity Ratio (%) 25% 23% 24%

Net Debt 74.2 62.0 61.0

D/E Ratio (times) 1.3 1.2 1.1

Cash and Deposits 22.1 30.0 27.0

(billion yen)【Cash Flows】

【Financial Data】

24