Pioneer says plasma to turn profit in 2005-06

The president of Pioneer Corp said on Monday that its plasma display and TV business would turn a profit next business year as it doubles production, but warned its DVD recorder operations would likely remain in the red amid industry-wide price slashing. In an interview with Reuters less than one week after the company said it would cut 2,000 jobs and shut one-fourth of its factories, Kaneo Ito also vowed to return the consumer electronics maker to profitability in the year from April 1.
Hit by sliding plasma TV and DVD recorder prices, Pioneer is forecasting a group net loss of 8 billion yen ($75.20 million) in 2004/05. The company has come to symbolise how quickly fortunes can change in an industry marked by sliding prices and growing competition from low-cost rivals.
Ito said Pioneer planned to more than double shipments of plasma displays and plasma televisions in 2005/06 to 1.0 million units, significantly boosting production yields. That compares with an estimated 390,000 units combined in 2004/05.
Pioneer, the world's fourth-largest plasma display maker after LG Electronics, Samsung SDI and Matsushita Electric Industrial, is currently running at less than half its output capacity as it reorganises its production structure and copes with slower-than-expected demand.
Ito said efficiency would get a large boost from higher output at its Kagoshima plant in southern Japan, which it purchased from NEC Corp last year. Kagoshima supplies panels to other TV makers such as Sony Corp and has suffered from weak demand.
Sony sent shockwaves through the industry in December by saying it may stop making plasma TVs.
Ito said orders for panels from Kagoshima had started to pick up after an extremely weak October-December quarter. The company is in the process of shifting production at the factory to more advanced displays incorporating its own display technology.
"We will be introducing new Pioneer technology into Kagoshima, but panels using that technology won't be available until this autumn," Ito said. "So it's not as if things will get better instantly. We expect things to improve from this fall."
Pioneer will also raise efficiency by consolidating different panel sizes into three exclusive lines - one for 61-inch panels, one for 50-inch panels, and one for 42-inch panels, Ito said. At present, production is spread across six different lines.
Last week Pioneer unveiled a restructuring plan under which it plans to cut 2,000 jobs, or about 5 percent of its workforce, and shutter roughly one-fourth of its 40 global production sites, aiming for annual cost savings of 30 billion yen.