AVC Networks Company Business Policy - Panasonic · PDF file4 AVC Networks Company Business

Copyright (C) 2016 Panasonic Corporation All Rights Reserved.

May 18, 2016

AVC Networks Company

Business Policy

Panasonic Corporation

AVC Networks Company

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

2. In this presentation, “FY17” refers to the year ending March 31, 2017

ＡＶＣＮｅｔｗｏｒｋｓＣｏｍｐａｎｙＢｕｓｉｎｅｓｓＰｏｌｉｃｙ

FY16 Results

1



FY16 Results

1,154.3

2

51.8 （４．５%）

74.7 （６．４%）

Increase

Increase

Increased due to growth of solutions

business

Increased due to growth of high value added products in addition to sales expansion

(+１%)

1,169.8

（Yen: billions）

Sales

OP （%）

FY15 FY16

※Figures are based on conventional basis.

ＡＶＣＮｅｔｗｏｒｋｓＣｏｍｐａｎｙＢｕｓｉｎｅｓｓＰｏｌｉｃｙ 3

※Reginal solutions include SI / Engineering / Support without 4 core businesses

-10.5

＋10.8 -20.4

＋75.3 -22.8

-25.8

＋8.9 ＋86.1

1,154.3 1,169.8 ＋15.5

● Solutions offset decrease of communication and mobility

● Prioritize investment on solutions business

＋9.6

＋30.6 -23.8

＋6.5

51.8 74.7 ＋22.9

OP Sales

FY16 FY16 FY15

Com

munic

atio

n

Regio

nal S

olutio

ns※

Othe

rs

Visua

l & Im

agin

g

Mobility

FY15

Busine

ss re

structuring

Vertic

al

Sale

s exp

ansio

n

Impro

vem

ent

of m

arg

inal p

rofit

Investm

ent/

fixe

d c

osts

Busine

ss re

structu

ring

※Figures are based on conventional basis.

FY16 Results

（Yen: billions）



Sluggish business in North America

（vs LY）

Mobility Communication

Shrinkage of land-line phone market

（vs LY -11％）

North America ： -30％ Started late to shift focus to new

business areas

（Home network business）

Failed to respond to changes in market situation and lost market share

Europe ： +9％

Japan ： +6％

FY16 Challenges

Showed growth by establishing solid relationship with customers such as automotive, utility, and transportation areas

Showed growth by sales expansion of payment systems


Japan：

135 companies

Global：

67 companies

Ｍ＆Ａ

Technology Collaboration

Proof test

Innovation Center

Expand Avionics business into new areas

Enhance solution business for QSR ※

Acquired in Aug. 2015

Acquired in Sep. 2015

Promote strategic M&A to expand business area

Expand collaborative activities with customers to create new

values and business

Automated translation

Light ID

For ＪＴＢ, Narita Int’l. Airport,etc.

For Tokyo Big Site, Tokyu, Tokyo Int’l Air Terminal, etc. ※Quick Service Restaurant

Prepare for FY17 onward



FY17 Business Policy


FY17 Management Targets

1,172.7 （+/0%）

1,175.0

7

69.0 （５．９%） 59.0

（５．０%）

Increase

Decrease

Increase in all four categories excluding exchange rate

effect

Decrease due to investments and negative impact of

exchange rate movement

（Yen: billions）

Sales

OP （%）

FY16 FY17(ｆ)

※Figures are based on IFRS.



Carry out investment to expand solutions business

-15.5

＋20.4

＋19.5

＋0.8 ＋18.4 -41.3

＋19.4 ＋4.6 -24.8

-9.2

69.0 59.0 -10/0

1,172.7 1,175.0 ＋2.3

FY17 Targets

OP Sales

FY17(ｆ) FY16 FY16 FY17(ｆ)

Com

munic

atio

n

Solu

tions

Oth

ers

Visua

l & Im

aging

Mobility

Sale

s gro

wth

Impro

vem

ent

of m

arg

inal p

rofit

Investm

ent

FX im

pact

FX im

pact


（Yen: billions）


Enhance U.S. sales force

Enhance product lineup 200.1 214.2

Mobility

Reestablish business in North America and return to high profitability

Sales Target

Low profitability business

210.5

FY15 FY16 FY17(ｆ)

Major Initiatives in Core Business

（Yen: billions）

Establish specialized sales/SE team for rugged mobile products

Target customers focusing on mobile workers

Strengthen sales organization for service business

Enhance product lineups of rugged tablets and handhelds

Differentiate products with core technology



Improve profitability by expanding sales of licensed software etc.

Expand peripheral device lineup Expand B2B2C business

10

Improve profitability and expand market share with differentiated model

Telephone

Improve existing business profitability

Initiatives for new business areas

ＩＰ－ＰＢＸ

Home network

Communication

128.6 123.9 149.0

Sales Target


FY15 FY16 FY17(ｆ)

（Yen: billions）

Low profitability business

Accelerate to shift into new business areas and improve profitability in existing business


Create values with “High image quality” x “Image

analysis” x “Optical technology”

high brightness and solid state light

Contribute to customers in amusement park, hotel,

and MICE industries as technology partners

Initiatives for entertainment business area

Enhance product lineup

4K, Video over IP 4K, face recognition

※Meeting, Incentive tour, Convention, Exhibition

Visual & Imaging

Expand sales by offering advanced visual & imaging solutions

Stable growth business

276.2 282.4 267.3

Sales Target


FY15 FY16 FY17(ｆ)

（Yen: billions）



Solutions

Enhance solutions business by industry in Japan, North America, and Europe.

High-growth business

Japan

Develop new products

Strengthen structure for solution business

M&A

North America

Europe

513.9 517.4

（Yen: billions）

Sales Target

425.0


FY15 FY16 FY17(ｆ)

New system products for retail and logistics business

New system products for smart maintenance support business

Establish Innovation Center

Establish solution dept. for food retail

Strengthen software development

Establish Innovation Center

Establish new solution company

Carry out M&A projects in Japan, North America

and Europe


Toward FY19



Direction for B2B Solutions Business

Customers

End Customers

AVC Company

Provide solutions with Core Products X IoT

Retail・Logistics

Public Entertainment

Avionics

Become expert in service industry, contribute to success of our customer


Forecast of IoT investment by industry

0%

10%

20%

30%

40%

50%

0% 10% 20% 30% 40% 50% 60%

ＣＡＧＲＦＹ16-19

Ratio

in each ind

ustry

(Size： IoT investment amount)

ＣＡＧＲ（ＦＹ16－19)＋３６％

※ Figures are estimated based on data provided by market research firm..

Total investment on ＩｏＴＣＡＧＲ＋２８%

Business Environment

Retail・Logistics

Entertainment

Transportation

Public

Manufacturing

Utility

Bank

Insurance

Rapidly expand IoT investments in service industry



Target Areas and Customer Values

16

Entertainment

Avionics

Improve passengers satisfaction

Attract more customers

Improve avarage customer spend

Provide value for “end customers” with our core technologies and M&A

Improve efficiency of maintenance service

Public

Save l abo r f o r ce

Improve Safety and Security

Retail/Logistics

Save l abo r f o r ce

Improve store efficiency


Entertainment

Avionics Public

approx. 300 billion yen

approx. 300 billion yen approx. 300 billion yen

Sales Target in FY19

approx. 200 billion yen

Retail/Logistics



ＰＯＳ

Visualize and automate store operation with customer touchpoint solutions

Manufacturing management system (Applied for store management)

Drive-through Back office software

Contribute to profit improvement per

store.

Collaboration with AIS

QSS ： M&A

Food Service (Quick Service Restaurant) Retail/Logisitics

ＫＩＯＳＫ

Mobile order


Large LED Screen

Offer amazing experience with high resolution video solutions to customers

Offer new experience to customers

to raise product price

Control Room System

Camera

Control Room System

Stadium Entertainment

Projector

Mobile Order／ＳＮＳ Video Distribution



TOUGHBOOK

Innovate field operation by integrating and managing images and data through various range of equipment

Establish safe and secure life Improve efficiency in

investigation

TOUGHPAD

Body worn camera

In Car Video System

UEMS(*)

Law Enforcement (Police) Public

※ＵＥＭＳ：Unified Evidence Management System


Towards High Profitability

exceeding OP 10% in FY19

FY16 FY17(ｆ) FY19(ｆ) FY21(ｆ)-

５．９ % ５．０ %

７．０ %

１０ %

Ｂ２Ｂ business

in Panasonic

2.9 trillion yen

1,172.7 1,175.0 1,250.0

Visual & Imaging

Mobility

Communication

Solutions

Others


（Yen: billions）


Disclaimer Regarding Forward-Looking Statements This presentation includes forward-looking statements (that include those within the meaning of Section 27A of the U.S. Securities Act of

1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934), as amended about Panasonic and its Group companies (the Panasonic Group). Panasonic discloses its consolidated financial forecasts for fiscal 2017 based on International Financial Reporting Standards (IFRS). 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 Americas, 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; the possibility that excessive currency rate fluctuations of the U.S. dollar, the euro, the Chinese yuan and other currencies against the yen may adversely affect costs and prices of Panasonic’s products and services and certain other transactions tha t are denominated in these foreign currencies; the possibility of the Panasonic Group incurring additional costs of raising funds, because of changes in the fund raising environment; the possibility of the Panasonic Group not being able 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 or incurring unexpected losses in connection with the alliances or mergers and acquisitions; the possibility of not being able to achieve its business objectives through joint ventures and other collaborative agreements with other companies, including due to the pressure of price reduction exceeding that which can be achieved by its effort and decrease in demand for products from business partners which Panasonic highly depends on in BtoB business areas; the possibility of the Panasonic Group not being able to maintain competitive strength in many product and geographical areas; the possibility of incurring expenses resulting from any defects in products 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; the possibili ty of incurring expenses resulting from a leakage of customers’ or confidential information from Panasonic’s systems due to unauthorized access or a detection of vulnerability of network-connected products of the Panasonic Group; 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 translated 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.

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