We believe we can enhance our competitiveness and profitability through striving to evolve a new existing base as a consolidated corporate entity under the administration of a joint holding company.
Expansion of sales of the Car Electronics Business and development of sales of new businesses and contribution to profits thereby are projected.
Moreover, as cost synergies, increased profits are projected as a result of reduction of development costs through joint development, procurement costs reduction through joint procurement of parts, reduction of subcontract processing and logistics costs through mutual subcontracting, optimization of manufacturing places, and sharing of infrastructure, and reduction of patent-related fees through mutual use of intellectual property, rights, etc.
Cash flow will be improved at each operating company by expanding economies of scale through common businesses and utilizing mutual consignment of production to reduce outsourced manufacturing.
As for balance sheet status, both companies will work to reduce net debt by utilizing the effect of improved cash flow. Both companies will also strive to reduce inventories and accounts receivable by promoting group wide production innovation and marketing reforms.
Furthermore, since the Joint Holding Company adopts the consolidated tax system used by KENWOOD, cash flow and current net income are expected to improve through the tax advantage of netting group companies’ taxable income and loss.