avc networks company midterm strategy - panasonic · toughbook wearable camera security camera, ......

Copyright (C) 2013 Panasonic Corporation All Rights Reserved.

May 30, 2013

Panasonic Corporation AVC Networks Company

President Yoshiyuki Miyabe

AVC Networks Company Midterm Strategy

Panasonic IR Day 2013

Notes: 1. This is an English translation from the original presentation in Japanese.

2. In this presentation, “fiscal 2014” or “FY2014” refers to the year ending March 31, 2014.

Contents

1. Company Profile

2. Restructuring for Challenging Businesses

3. Growth Strategy

4. Road to Cloud-connected Products


New AVC Networks Company’s overviewNew AVC Networks Company’s overview

•New AVC covers both BtoC x BtoB areas, and AV x ICT areas.

Former AVC Netwrokds (AV) Former System & Communications (ICT)

AVC Networks Company

Approx. 47,000 people （former AVC: approx. 24,000 and former SNC: approx. 23,000)employee

BtoBBtoC

BtoBBtoC

TVVideoDSCAudio etc

Fixed phoneFax

Smart phoneFeature phone etc

Broadcasting AVIn-flight EntertainmentProjectorPC etc

Visual securityInfra-system

Office equipmentterminal etc

Cross-ValueInnovation

2/27

What AVC realizes by combining 2 companiesWhat AVC realizes by combining 2 companies

•Creating Cross-Value by integrating of AV & ICT technologies

Compress HD image smaller & faster

Wireless communication Wi-FiLTE

Transmit Various Data w/o any delay

analysis, Certification & tracing ofimage

Robustness, Shockproof, Downsizing

WirelessWearableCamera Wireless

Car-use Camera

HeadOffice

Wearable CameraTOUGHBOOK Security Camera, Video monitoring system

Cross-Value

No. of Patents owned:Approx.1,500(including patents under applying for)

No. of Patents owned:Approx.920(including patents under applying for)

DIGABroadcasting AV VIERA

No. of Patents owned:Approx.1,700(including patents under applying for)

No. of Patents owned:Approx.3,000

Image Management techImage Management techHard device techHard device tech

Image compressing techImage compressing tech Wireless communication techWireless communication tech

Panasonic GroupNo. of Global Patent Applying for

: Rank 2（2012）

AV Tech (former AVC) ICT Tech (former SNC)

(Ex)

TOUGHPAD

3/27


Management of AVC Networks Company Management of AVC Networks Company

PresidentYoshiyuki MIYABE

Snr Vice PresidentShiro NISHIGUCHI

Snr Vice PresidentToshiyuki TAKAGI

Snr Vice PresidentYasuji ENOKIDO

Snr Vice PresidentPaul Margis

AVC Networks CompanyAVC Networks Company

Consumer BusinessConsumer Business System Solution BusinessSystem Solution Business System Products BusinessSystem Products Business Avionics BusinessAvionics Business

Based inOsaka

Based inTokyo

Based inTokyo

Based inUSA

4/27

Proceeding restructuring and eliminate the businesses in red

Establish solution business to lead the overall sales

Key initiatives for Midterm planKey initiatives for Midterm plan

•Improve profitability in the unprofitable businesses.•Toward on growth, enhance business base and create new business.

GrowthStrategy

UnprofitableBusinesses

5/27

Create the cloud-connected products by unifying R&D platform in Panasonic andalliance with IT enterprises

Cloud-ConnectedProducts


Contents

1. Company Profile


3. Growth Strategy


Unprofitable Businesses: Main pointsUnprofitable Businesses: Main points

•Improve marginal profit & reduce fixed cost.

・Restructuring of Mobile Phone Business

・Restructuring of TV/Panel Business

・Initiative of DSC Business

BtoCBusinesses

OtherBusiness

7/27


TV/Panel Business: profit improvement (Production & Sales Consolidated）

TV/Panel Business: profit improvement (Production & Sales Consolidated）

•54.5 bil. yen profit improvement in FY2014 vs. last year by cutting cost & manufacturingreform, increase panel sales for Non-TV, and profit improvement of sales section.

Price Decline

Cost Dow

n/Value Engineering

Increase larger sized TV &Squeeze negative profit m

odels

Increase panel sales for Non-TV

Effect from restructuring

in previous year

Profit Improvem

ent ofSales section

Operating Profit (E) [Unit: bil. yen]

-88.5

-23.0

+33.0

+1.0

+22.0

+4.0+17.5

-34.0

FY

14

FY

16

Turn

into B

lack

•Evolution of Smart TV

•Regional Strategy

FY

13

FY

12

-210.0 CD/VE: 20% material cost cut in 32’ TV (y-o-y)

•FY14 new products: good reviews in global

…and more

[LCD TV] [Plasma TVﾞ]

Product Competitiveness

Marketing Strategy

Developed

CountriesD

evelopingCountries

・Sales Increase of Value-added Smart TV・USA: Prioritize profitability and

reconstruct sales channelsexpand web based sales

・Enhancement of launching products suitable in each regions:Collaboration with local dealers & utilizing ODM

・Voice Command Control・Easy operation by personalization of

TV monitor

・Cloud-based Services

8/27

LCD Panel BusinessLCD Panel Business

•Concrete progress on shifting to sales for Non-TV panels.•Production for the last year orders & find the seeds for future.

Initiatives in FY2014•Launched 17 models last year and currently under discussion with 34 companies

•Proportion of Non-TV target: approx. 80% in FY14

•Developing new customers with advantage of IPSα panel

Proportion of Non-TV Panels sales (%)

・Receive more orders in larger-sized panels for car-use(collaboration with AIS)

For Cars

・Receive orders for 31”4K2K newly For Business

・Customization for some customersFor ITs

Sales StrategyApplication

USA:406 Japan:214No. of Patents

・Photo-alignment technology(improve color reproducibility etc)

31”4K2K forMedical etc

・New TFT structure・G8.5 line multiple hi-through put production

10” for tablet

Our advantagee.g.

0%

50%

100%

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

100%

50%

0%Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

ForTVs

ForNon-TVs

FY1480%

FY１2 FY13 FY14

9/27


2012 2013 2015

Mirror-less

•Concentrate on mirror-less cameras and high value-added compact cameras.•Reduce the model numbers for compact cameras and total fixed costs substantially.

Sales forecastSales forecast Initiatives in midterm plan

•Enhance products’ uniqueness

•Squeeze fixed costs substantially as well ascompact models

•Shifting value-added models

•Sales :Enhance photo channels todeliver camera’s advantages

<TTL Fixed Costs transition>Lens etc

Compact

FY2013 FY2014

Movingpicturequality

Changeablelens

・Hi Bit & Flame rates・Hi Speed＆Contrast AF★Many reputations got

・lenses for motion picture (TTL 19pcs)(as of 30th May, 2013 most lenses for mirror-less cameras)

Uniqueness Advantage

FY2016

-60%

Mirror-less

GH3 …and more

1 2

vs L/Ymore than -30%

FY2013 FY2014

<Digital Camera Sales in units>6.17million

5.00 million

Compact

Value-added

Entry

Mirror-less

Sales 93 bil. yen 90 bil. yen

10/27Digital Still Cameras BusinessDigital Still Cameras Business

2012 2013 2014 2015

Target for BtoC businessTarget for BtoC business

•Aiming to move into the black in FY14 by reducing fixed costs & improving marginal profit•Aiming for OP 5% in FY16 by eliminating the unprofitable businesses

<Sales: billion yen> <Operating profit (%)>

FY2013 FY2014 FY2015 FY2016

Aiming for 5%

Move into the Black

640.0640.6680.0

BtoCSales

±0%

*w/o PPD, PLD, PMCin this figure

*Sums of Business Division Sales

11/27


Mobile phone business: profit improvementMobile phone business: profit improvement

Restructuring

Reduce Fixed Cost

BtoBShift

•Reducing fixed cost by outsourcing of R&D and production and transforming currentbusiness into BtoB area, improve OP by 7 bil. yen vs L/Y in FY14 and achieve the black in FY16

•Utilizing outsource of R&D and productionSubstantially cut fixd cost by shortening R&Dlead time & effective use of resources

Own Outsource

＜Average R&D cost＞

-２ bil. yen

•B2B Robust Smart Phone business・Initiate sales as one of TOUGHBOOK’s lineups

<Advantage>・Tough・Long life battery・High reliability

＜Fixed cost(%)＞

FY2013 FY2016

-１５％

100

FY2009 FY2013 FY2014

50%30%

100

FY2009 FY2013 FY2014

45% 41%

•Operating profit/Sales quantities/Fixed costs

-５５％-５９％

-５０％

-７０％FixedCosts

SalesQuantities

Black -8 bil. yen -1.1 bil. yen

09FY=100%

09FY=100%

OP

12/27

Start business in Japan and USA

Contents

1. Company Profile


3. Growth Strategy



Growth Strategy : Main pointsGrowth Strategy : Main points

•Increase the number of customers & enhance solution business in BtoB business.

14/27

・Leveling up in solutions business

・Expanding solution business in overseas

・Enhancing organization for solution business

・Mutual exploitation of AV & ICT sales channelsIncrease the number of customers

EnhanceSolutionBusiness

company

PublicService Local

office

Government

SocialInfrastracture

End users

Contribute to global BtoB customers

Present BtoB businessPresent BtoB business

•Providing AV + ICT products & solutions with clients andcontributing to their success

BtoB main products

AVAV

ICTICT

Broadcating AV

Projector

In-flightEntertainment

Induxtrial-usemonitors

CATV terminal

Business –use PC

HD communicationsystem POS system

Mobile phoneBase station

Securitysystem

15/27

Disaster Preventionradio system


•Providing AV+ICT products & services to customers directly.

16/27Mutual exploitation of AV & ICT sales channelsMutual exploitation of AV & ICT sales channels

PCBtoBsmartphone

IC reader/writer

Projector

SecurityCamera

Customer A（Finance, Retail industry）

Customer B（Public services）

…

…Customer C（event, company, education）

industry

Market Share in N.A.

Ｎｏ．１

Market Share in Japan

Ｎｏ．１

(More than 10k lm)Global Market Share

Ｎｏ．１

BtoB Business: Leveling up in solution businessBtoB Business: Leveling up in solution business

•From common products to customized products, and forward up to industryspecified system integration, aiming to pulling up Solution-level

SI companiesDealers

R&D-production-supplying

R&D-production-supplying CustomizationCustomization Engineering

(SI-install-maintain-operate)

TOUGHBOOKPayment terminalsBroadcasting cameraSecurity camera etc

Let’s noteScannerMFP etc

AvionicsIntegrated Security systemInfra system etc

End Users

System SolutionSystem Solution

Product SolutionProduct Solution

Box (Product)Box (Product)

DealersCommonproductsCommonproducts

CustomizedProducts

CustomizedProducts

IndustrySpecifiedSystem

IndustrySpecifiedSystem

17/27


•Target : Security Business sales CAGR = 15%

具体的な取り組み

Starting from TOUGHBOOK sales channel, challenge to expand the businessto monitoring system and to security business with video analysis

Starting from TOUGHBOOK sales channel, challenge to expand the businessto monitoring system and to security business with video analysis

Town Monitoring

CurrentCurrentPositionPosition

<Solution-level up>

Police car Police station Detention CenterPrison

TOUGHBOOK+ICV

MonitoringSystem

VideoAnalysis

(Collaborationwith VMS)

Event Monitoring（LTE・WiMAX）

(Utilize TOUGHBOOK sales channel)

Establish promotion organizationfor each industries

Alliance with Video Management System company etc

Monitoring System

Police station Jail etc

Sweatbox

BtoB Business: Example of leveling up in solution businessBtoB Business: Example of leveling up in solution business 18/27

Town Security

<Business area>(Public safety)

BtoB Business: expanding solution business in overseasBtoB Business: expanding solution business in overseas

具体的な取り組みExpand infra system developed in Japan to Asia and China

Detect CarsTraffic Monitoring

Camera

Traffic Monitoring

Information server Information display

Portable information display

Traffic Management

Room

Example: Traffic management system for emerging countriesExample: Traffic management system for emerging countries

Image ProcessingServer

Vietnam Metropolitan ExpresswayITS development project

Signing Ceremony13 March, 2013

19/27

•Target: Sales 250.0 billion yen in FY2016


Complete preparation for future in FY14, launch full-scale business after FY14

•Establish organizations suitable to each regions & business(enhancement of AVC’s teams + alliance or M&A with partners)

BtoB Business: Enhancing organization for solution businessBtoB Business: Enhancing organization for solution business

Completion of promotion teams for system solutionsCompletion of promotion teams for system solutions

BuildTeam

FY2014 FY2015 FY2016

Open & develop global accounts and start business in each regionsEstablishSolution

Promotion officePre-

paration

Training Program Geographical Training/SE conventions (whole member meeting)

Cross business divisionactivity

Preparation for BtoB Biz promotion teams Execution of plan Further development of business

LaunchNew biz

Promote alliance or M&A with partners for enhancement businessAlliance

M&A

20/27

•Capital investment (Asia) •Possibilities of Alliance

Security solutionfor Trains/Buses

WirelessUnit

⇒ R&D company for network terminals for cars e.g.) Security business

・Cloud-service providers・VMS（※１） vendors

NetworkCamera

（※１）Video Management System

2012 2015

•Stable sales growth, 970 billion yen in FY2016•Increase solution business by leveling up in solution business

Target for BtoB businessTarget for BtoB business

Details (by main business)

FY2013 FY2016

[Sales: billion yen]

970

811

Box

ProductSolution

SystemSolution

Solution Business

Growth rate +23%

21/27

+30 bil. yen

+50 bil. yen

+20 bil. yen

+40 bil. yen

Cloud-operational

servicebusiness

+10 bil. yen

+159

<Sales transition by each segment>

Mobile IT

Security

Infrastructure

AV


Contents

1. Company Profile


3. Growth Strategy


R&D organization enhancement for the creation ofCloud-connected productsR&D organization enhancement for the creation ofCloud-connected products

•By alliance with global IT companies, promote cloud-connected products•Along with progress of IT in AV/mobile phones/car, unify R&D platform

Unification of R&D Platform Business Alliance

New site(established May, 2013)

IT Companies

Japan N.A. (Newly established)

NFCCollaborative creation of Cloud-connected products

LTE BIG DATA

SDNBYODCloud Founding

Unification

AV’s Informatization

Mobile’s informatization

Car’s informatization

AVC

AIS

IT Trend

AllianceCollaboration

23/27


•By integrating of AV & ICT technologies,deliver new customer value for new customers

具体的な取り組みInnovate customer’s business scene (Discussion in internal MTG or with end users）

・4K(3,840x2,560) high fidelity that you can feel air（3,840x2,560）

4K Tablet4K Tablet

Many inquiries globally from car manufactures, design offices, professional camera men,car dealers, medicals etc. Start business before end of March 2014

Example 1: Cloud-connected ProductsExample 1: Cloud-connected Products

[Discussion image][Product image]

24/27

•Building partnership with IT companies, contribute to cloud business.•Applying B2C technology to B2B business, create the new businesses.

具体的な取り組み

The vast volume of digital data can be stored for a long period with the optical storage technology of long life, low-maintenance, and high reliability

BD ArchiverBD Archiver

[BD Archiver](Start business in FY2014)

[BD Recorder]

Feature tech

Advantage & Benefit ※while save 100TB data for 10 years (Panasonic analysis)

・Media & drive tech

・High density record & playback tech

・Digital signal processing tech

・Ability to propose tech

for high capacity

・Longer life & higher reliability than HDD & magnetic tape

→ Substantially reduce data transmission

・HDD :Always must turn on

・Magnetic tape :Require cost for air conditioning

→ can reduce power consumption Considerably

(Comparing to HDD by-98%※）

25/27Example 2: Cloud-connected ProductsExample 2: Cloud-connected Products


・ Restructuring for TV/Panel and mobile phone businesses

and moving into the black in FY2016

・ Focusing on mirror-less SLR for DSC business

・Incrasing the number of customers and enhancing organization

for solution business

・Making BtoB business lead the whole AVC’s sales growth

GrowthStrategy

ChallengingBusiness

・Unifying R&D Platform

・Accelerating alliance with global IT companies

Cloud-ConnectedProducts

26/27Key initiatives for Midterm plan (Summary)Key initiatives for Midterm plan (Summary)

AVC Networks Segment: Mid-term targetAVC Networks Segment: Mid-term target

•Sales 1,980 billion yen, Operating Profit over 5%•From FY2014-2016 accumulated FCF over 50 billion yen

[billion yen]

2012 2013 2014 2015

1,830.01,835.7

FY2013 FY2014 FY2015 FY2016

1.3%

Over 5%

-1.7%

[Operating Profit (%)]

1,980.0

Sales

From FY14-16 accumulatedOver 50 bil. yen

Company’sＦＣＦ

(Production & Sales consolidated）

-20.2 bil. yen

27/27


Disclaimer Regarding Forward-Looking StatementsThis presentation includes forward-looking statements (within the meaning of Section 21E of the U.S. Securities Exchange

Act of 1934) about Panasonic and its Group companies (the Panasonic Group). To the extent that statements in this presentation do not relate to historical or current facts, they constitute forward-looking statements. These forward-looking statements are based on the current assumptions and beliefs of the Panasonic Group in light of the information currently available to it, and involve known and unknown risks, uncertainties and other factors. Such risks, uncertainties and other factors may cause the Panasonic Group's actual results, performance, achievements or financial position to be materially different from any future results, performance, achievements or financial position expressed or implied by these forward-looking statements. Panasonic undertakes no obligation to publicly update any forward-looking statements after the date of this presentation. Investors are advised to consult any further disclosures by Panasonic in its subsequent filings under the Financial Instrument and Exchange Act of Japan (the FIEA) and other publicly disclosed documents. .

The risks, uncertainties and other factors referred to above include, but are not limited to, economic conditions, particularly consumer spending and corporate capital expenditures in the United States, Europe, Japan, China, and other Asian countries; volatility in demand for electronic equipment and components from business and industrial customers, as well as consumers in many product and geographical markets; currency rate fluctuations, notably between the yen, the U.S. dollar, the euro, the Chinese yuan, Asian currencies and other currencies in which the Panasonic Group operates businesses, or in which assets and liabilities of the Panasonic Group are denominated; the possibility of the Panasonic Group incurring additional costs of raising funds, because of changes in the fund raising environment; the ability of the Panasonic Group to respond to rapid technological changes and changing consumer preferences with timely and cost-effective introductions of new products in markets that are highly competitive in terms of both price and technology; the possibility of not achieving expected results on the alliances or mergers and acquisitions including the business reorganization after the acquisition of all shares of Panasonic Electric Works Co., Ltd. and SANYO Electric Co., Ltd.; the ability of the Panasonic Group to achieve its business objectives through joint ventures and other collaborative agreements with other companies; the ability of the Panasonic Group to maintain competitive strength in many product and geographical areas; the possibility of incurring expenses resulting from any defects inproducts or services of the Panasonic Group; the possibility that the Panasonic Group may face intellectual property infringement claims by third parties; current and potential, direct and indirect restrictions imposed by other countries over trade, manufacturing, labor and operations; fluctuations in market prices of securities and other assets in which the Panasonic Group has holdings or changes in valuation of long-lived assets, including property, plant and equipment and goodwill, deferred tax assets and uncertain tax positions; future changes or revisions to accounting policies or accounting rules; as well as natural disasters including earthquakes, prevalence of infectious diseases throughout the world, disruption of supply chain and other events that may negatively impact business activities of the Panasonic Group. The factors listed above are not all-inclusive and further information is contained in the most recent English version of Panasonic’s securities reports under the FIEA and any other documents which are disclosed on its website.

In order to be consistent with generally accepted financial reporting practices in Japan, operating profit (loss) is presented in accordance with generally accepted accounting principles in Japan. The company believes that this is useful to investors in comparing the company's financial results with those of other Japanese companies. Under United States generally accepted accounting principles, expenses associated with the implementation of early retirement programs at certain domestic and overseas companies, and impairment losses on long-lived assets are usually included as part of operating profit (loss) in the statement of income.

avc networks company midterm strategy - panasonic · toughbook wearable camera security camera, ......

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