Densei-Lambda
Revises Fiscal 2001 First-Half
and Full-Year Consolidated Projections
Company unveils
cost-reduction initiatives
TOKYO, September
14, 2001 - Densei-Lambda K. K. (TSE: 6917), a leading manufacturer
of power systems, today revised downward its consolidated first-half and
annual sales,
ordinary profit, and net income projections for fiscal 2001, ending March
31, 2002, due to a
notable slowdown in key business sectors.
First-half consolidated
sales are now expected to total ¥22.0 billion, compared to an original
forecast of ¥25.5 billion. Due to declines in sales and gross margin,
the Company projects an
ordinary loss of ¥800 million and a net loss of ¥1.3 billion,
compared to original ordinary and
net profit forecasts of ¥1.2 billion and ¥700 million, respectively.
Densei-Lambda is
revising its first-half revenue projection primarily due to a slowdown
in
sales to semiconductor- and IT- related customers that became pronounced
recently. While
relatively mild declines first appeared in July 2001, the extent of that
weakness appeared to be
within normal monthly fluctuations. The following month weakness continued,
but could not
be recognized to be of a severe nature until the beginning of September
2001.
Although the Company
moved quickly to address its sales declines through headcount
reductions and cost controls, fixed costs could not be reduced as rapidly.
Keeping new
product programs and sales and marketing initiatives in place to protect
strategic
competitiveness, Densei-Lambda continued to reduce operating costs to
address the
increasing severity of the slowdown. Despite these aggressive efforts,
fixed costs remaining in
the first half are expected to impact margins and thereby result in deficits
for the period.
Reflecting first-half
revisions, Densei-Lambda also today adjusted its consolidated forecasts
for the full fiscal year, ending March 31, 2002, but stressed that actual
results could be higher
or lower depending upon as yet indeterminable environmental conditions.
The Company is
now projecting full-year consolidated sales of ¥43.0 billion, an ordinary
loss of ¥1.2 billion,
and a net loss of ¥1.3 billion. These revised forecasts compare to
¥56.5 billion, ¥3.6 billion,
and ¥2.0 billion, respectively, announced on May 24, 2001.
Takeo Suzuki, President
of Densei-Lambda, said, "Following our record performance in fiscal
2000, we built momentum with a strong first-quarter 2001 performance.
Although we had
expected nominal declines in our business based on likely slowdowns, the
fiscal 2001
operating environment weakened more substantially than anticipated, particularly
from the
beginning of September." He added, "We have launched comprehensive
and aggressive cost
reductions and are determined to continue all efforts necessary to build
on our position as an
industry leader with sustainable growth."
Cost reductions and
streamlining initiatives
Densei-Lambda today detailed a series of cost-reduction and streamlining
initiatives already
underway that, in aggregate, seek to reduce costs by approximately \2
billion in fiscal 2002
| • | In
August 2001, procurement and logistics activities were integrated
into a single division. Contingent upon an improvement in the domestic economy in fiscal 2002, this initiative seeks to reduce costs by approximately 20% of current procurement and logistic expenditures, next fiscal year. As part of this effort, vendors are being streamlined from 450, to a target 150, and more efficient transportation and warehousing options are being identified. |
| • | The
Company seeks to reduce consolidated headcount by 20% this fiscal
year. Staff reductions launched in March 2001 and carried out through August 2001, have already reduced 500 people, or 14% of the total workforce, primarily from overseas manufacturing sites. The remainder of headcount reductions will come from early retirement programs for domestic workers and other programs. |
| • | Densei-Lambda
is converting its Business Unit organizational system into a Functional System to better realize synergies among its operations. In a related move, the Company has also introduced a full-scale enterprise resource planning (ERP) system that is expected to begin realizing business efficiencies from next fiscal year and beyond. The ERP system is slated for full implementation across the organization in 18 to 24 months. |
| • | To
improve its customer service, streamline processes, and enhance its
business performance, Densei-Lambda will directly perform maintenance and service activities for Secure Power products. |
| • | Following
similar actions in Secure Power, the Company will phase out less profitable
products from its Switching Power Supply business through discontinuation or integration of similar offerings. Centralization of research and development resources and swift reduction of inventory are, furthermore, already underway. |
Masami Kobashi, Managing Director, Densei-Lambda Tel: 3447-4411
Headquartered in
Tokyo, Densei-Lambda is the Asian hub of operations for Invensys Powerware.
It is
a research and development center of excellence for DC-DC converters and
switching power supply
product development, manufacturing and purchasing. Densei-Lambda also
provides marketing, sales
and service support for Invensys Powerware's battery and uninterruptible
power supply products.
Invensys Powerware
is an American-based world leader of secure power, energy storage, power
conversion and telecom energy systems with 19,000 employees and £1.8
billion in sales.