Pioneer : Announces Business Results for Fiscal 2016 (PDF 804 KB)

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For Immediate Release May 12, 2016

Pioneer Announces Business Results for Fiscal 2016

Pioneer Corporation today announced its consolidated business results for fiscal 2016, the year ended March 31, 2016.

Consolidated Financial Highlights

(In millions of yen except per share information) Year ended March 31

2016 2015 Percentchange

Net sales	¥449,630	¥501,676	-10.4%
Operating income	7,304	7,778	-6.1
Ordinary income (loss)	7,250	(2,915)	-
Net income *	¥ 731	¥ 14,632	-95.0%
Net income per share *	¥1.99	¥39.85

* Net income attributable to owners of Pioneer Corporation

Consolidated Business Results

In fiscal 2016, consolidated net sales declined 10.4% year on year, to ¥449,630 million. This decrease was mainly due to the impact of the transfers of the home AV business and DJ equipment business in fiscal 2015, combined with a decline in consumer-market car audio sales, mainly in emerging markets, despite an increase in OEM car audio sales.

Operating income was ¥7,304 million, a 6.1% decrease year on year. Despite lower selling, general and administrative (SG&A) expenses as a result of the business transfers and organizational streamlining, a deterioration in the cost of sales ratio mainly due to an increase in depreciation and amortization, as well as a decrease in gross profit due to lower sales led to an overall decrease in operating income. Net income attributable to owners of Pioneer was ¥731 million, a 95.0% decrease from the previous fiscal year, reflecting the absence of the ¥48,415 million gain recorded from the transfer of the DJ equipment business in fiscal 2015, despite a turnaround to a foreign exchange gain from the previous year's foreign exchange loss.

During fiscal 2016, the average value of the Japanese yen declined 8.5% against the U.S. dollar, to ¥120.14=1 U.S. dollar, and rose 4.7% against the euro, to ¥132.58= 1 euro, compared with the previous fiscal year.

For further information, please contact: Investor Relations & Public Relations Division Corporate Management Division

Pioneer Corporation, Tokyo

Phone: +81-3-6634-8777 / Fax: +81-3-6634-8745

E-mail: pioneer_ir@post.pioneer.co.jp IR Website: http://pioneer.jp/en/ir/

Car Electronics sales declined 1.2% year on year, to ¥351,293 million.

Sales of car audio products decreased. Consumer-market sales declined, mainly from lower sales in emerging markets. OEM sales rose owing to increases mainly in Japan and North America.

Car navigation system sales increased. Consumer-market sales declined in Japan, but growth in China resulted in an overall increase. OEM sales rose owing to increases in Southeast Asia and China, despite decreases in Japan and North America.

OEM sales accounted for 61% of total Car Electronics sales, compared with 57% in the previous fiscal year.

By geographic region, sales in Japan declined 1.9%, to ¥128,912 million, and overseas sales declined 0.8%, to ¥222,381 million.

Operating income declined 36.0% year on year, to ¥7,032 million, as a result of the deterioration in the cost of sales ratio mainly due to increased depreciation and amortization, and foreign exchange rate movements, as well as lower sales, despite a reduction in SG&A expenses.

In the Others segment, sales declined 32.7% year on year, to ¥98,337 million, primarily because of the transfers of businesses in fiscal 2015.

By geographic region, sales in Japan decreased 14.2%, to ¥52,958 million, and overseas sales declined 46.2%, to ¥45,379 million.

Operating income was ¥1,405 million, compared with an operating loss of ¥2,388 million in fiscal 2015, mainly reflecting a decline in SG&A expenses.

Notes: 1. Operating income (loss) in each business segment represents operating income (loss) before elimination of intersegment transactions.

2. In fiscal 2015, the home AV, telephone, headphone-related, and DJ equipment businesses were transferred. In accordance with these transfers, the business segments from fiscal 2016 are classified as "Car Electronics" and "Others." Figures shown for fiscal 2015 have been reclassified accordingly.

Consolidated Financial Position

Total assets as of March 31, 2016, were ¥298,012 million, a decrease of ¥30,265 million from March 31, 2015, due to decreases in property, plant and equipment, inventories, and trade receivables, despite an increase in intangible assets. Intangible assets grew

¥5,422 million, to ¥46,960 million, mainly from new purchases of software to be installed in products. On the other hand, property, plant and equipment decreased ¥14,935 million, to ¥42,694 million, mainly from the sale of land and buildings associated with the relocation of the head office. Inventories decreased ¥10,458 million, to ¥52,837 million, mainly from foreign exchange rate movements. Trade receivables decreased

¥4,562 million, to ¥74,596 million, mostly from foreign exchange rate movements.

Total liabilities were ¥207,526 million, a ¥13,685 million decline from March 31, 2015. Despite the issuance of ¥15,075 million of convertible bonds and a ¥6,906 million increase in accrued pension and severance costs mainly due to a change in the discount rate, accrued expenses decreased ¥13,927 million, mainly due to the payment of special retirement benefits associated with organizational streamlining carried out in fiscal 2015, and a ¥6,538 million decrease in trade payables, mostly from foreign exchange rate movements. In addition, a ¥5,614 million decrease in short-term borrowings and a

¥6,367 million decrease in current portion of long-term debt resulted in an overall decline of liabilities.

Total equity was ¥90,486 million, a decrease of ¥16,580 million from March 31, 2015, mainly reflecting decreases of ¥8,960 million in foreign currency translation adjustments and ¥7,590 million in defined retirement benefit plans.

Cash Flows

During fiscal 2016, operating activities provided net cash in the amount of ¥19,292 million, a ¥15,272 million decrease from the previous fiscal year. This reflected a ¥9,602 million decrease in accrued expenses, mainly due to the payment of special retirement benefits, compared with a ¥16,196 million increase in the previous fiscal year, and a decrease in trade receivables of ¥912 million, compared with a ¥10,807 million decrease in the previous fiscal year.

Investing activities used net cash in the amount of ¥20,083 million, compared with ¥36,880 million in net cash provided in the previous fiscal year. This primarily reflected the absence of the ¥57,124 million of cash inflows from business transfers recorded in the previous fiscal year.

Financing activities provided net cash in the amount of ¥3,408 million, compared with ¥55,424 million in net cash used in the previous fiscal year. This mainly reflected proceeds of ¥15,060 million from the issuance of convertible bonds in fiscal 2016.

Foreign currency translation adjustments on cash and cash equivalents were a negative ¥2,300 million, compared with a positive ¥1,752 million in the previous fiscal year.

As a result, cash and cash equivalents as of March 31, 2016, totaled ¥51,993 million, a ¥317 million increase from March 31, 2015.

Business Forecasts for Fiscal 2017

Consolidated business forecasts for fiscal 2017, ending March 31, 2017, are as follows:

(In millions of yen)

First half Full year

Forecasts for fiscal 2017	Results for fiscal 2016	Percent change	Forecasts for fiscal 2017	Results for fiscal 2016	Percent change
Net sales	¥200,000	¥222,595	-10.2%	¥420,000	¥449,630	-6.6%
Operating income	1,500	2,078	-27.8	8,000	7,304	+9.5
Ordinary income	1,000	1,405	-28.8	7,000	7,250	-3.4
Net income (loss) *	¥ (2,000)	¥ (1,994)	-%	¥ 1,000	¥ 731	+36.8%

* Net income (loss) attributable to owners of Pioneer Corporation

For fiscal 2017, Pioneer is projecting lower sales and higher profit compared with fiscal 2016.

The projected decline in net sales is based on an anticipated decrease in car OEM orders, and a forecast for lower sales of optical disc drive-related products.

In terms of profit, the projected decline in net sales will lead to lower gross profit, but with an anticipated improvement in the cost of sales ratio, operating income is expected ¥8.0 billion. The forecasts for ordinary income and net income attributable to owners of Pioneer are ¥7.0 billion and ¥1.0 billion, respectively.

The yen-U.S. dollar exchange rate assumption for fiscal 2017 is ¥115, and the yen-euro exchange rate assumption is ¥125.

Basic Management Policies

As its basic management policies, Pioneer aims to create new markets and cultures with products and services borne from innovative, unique ideas and cutting-edge technologies that continue to realize our Group Philosophy of "Move the Heart and Touch the Soul."

Issues to Be Addressed

In terms of Pioneer's operating environment, long-term continued growth is forecast for the automotive industry, led by emerging markets. The car electronics industry is entering a period of major changes against a backdrop of the increasingly diverse needs of customers, with moves, especially in developed markets, toward growing the connected car business in which hardware has the functions of information and communication devices, and toward realizing autonomous driving.

We view these significant changes in the car electronics industry as our business opportunity to position ourselves for future growth. Our aim is to be a leading company in "Comprehensive Infotainment" that creates comfort, excitement, reliability and safety in vehicles.

Toward this goal, we will implement the growth strategy for the Car Electronics segment to strengthen our earnings base. This will include increasing development efficiency and reducing development costs through the integrated AV products and navigation system development, with business pillars of consumer-market, OEM, and map and autonomous driving.

In the consumer-market business, we will work to increase sales by introducing new products that offer new value with features including entertainment in vehicles and smartphone-linked functionality. We will also strengthen our new commercial business with cloud-based services, including services for automobile insurance and a Vehicle Assist telematics service for fleet vehicles. In emerging markets, we aim to increase sales by strengthening our affordably-priced product line, such as through the introduction of new products tailored to local markets.

In the OEM business, we will work to optimize our overall business process to accommodate a large scale of orders from existing customers. We will also work to increase development efficiency through developing and designing products that anticipate customer needs, as a way to win new orders. Through these measures, we intend to improve the profitability of the OEM business.

In the map business and autonomous driving field, we will continue to develop high-precision map data in Japan and expand the map business to the ASEAN region. We are working to realize autonomous driving with the development of the "3D-LiDAR" driving space sensor and a "data ecosystem" for advanced maps, with the aim of being an "essential company toward realization of autonomous driving."

In terms of new businesses, we will work toward the effective development of a medical and health care-related business and an OLED lighting business.

In fiscal 2017, we will make upfront investment for the future growth of the Car Electronics segment, while also maintaining solid earnings in the consumer-market business and giving significant attention to the realization of autonomous driving.