The woes of Japan’s consumer electronics sector were highlighted on Monday as Pioneer said its president and chairman would resign over the group’s poor performance and Moody’s Investors Service downgraded its struggling peer, Sanyo.

Pioneer said that Kaneo Ito, its president for the past nine years, and Kanya Matsumoto, chairman, would step down to take responsibility for the group’s disappointing performance.

Tamihiko Sudo, the company’s current vice-president, who is credited with building up the profitable car electronics business, is to take over as president in January.

The mid-sized electronics group also said it would unveil a drastic restructuring programme aimed at returning to profitability on December 8.

However, Pioneer denied it planned to slim down its struggling home electronics businesses and declined to confirm reports in the Japanese media that it would cut its workforce by 10 per cent and consolidate manufacturing sites.

The plight of Pioneer, which reported a Y16bn operating loss in the first half and said it would report a record net loss of Y24bn for the full year, highlights the speed of change in the electronics sector.

The spread of digital technology has triggered sharp price falls that some manufacturers have been unable to respond to quickly enough.

Last week, Sanyo said its full-year losses would be much larger than previously forecast and said it was seeking to raise Y200bn to Y300bn in new funds to boost its capital base.

Moody’s on Monday responded by cutting Sanyo’s long-term debt rating one level to Baa2, two levels above junk, and put it on review for further possible cuts. Standard & Poor’s downgraded Sanyo earlier this month.

Although Pioneer’s Mr Ito said the company planned to focus on car electronics, he dampened expectations the group was poised to pull out of loss-making electronics businesses.

“We have no intention of shrinking [the home electronics business],” he said.

Mr Ito admitted Pioneer had not been quick enough to respond to the challenging market environment. But he said: “I am confident that our [strategic] direction was not mistaken.”

In particular, Mr Ito and Mr Sudo denied Pioneer planned to pull out of or shrink the PDP operations, which have been a major drain on the group.

Pioneer, which acquired NEC’s PDP business for Y40bn last year, has bet heavily on PDPs under Mr Ito.

He conceded that “NEC’s PDP business has become a burden because at this point we are not getting any OEM business [to supply third parties with panels] at all.”

But he said PDP technology still had tremendous potential as consumers would want high-quality screens when TV broadcasting turned digital.

Mr Sudo also expressed faith in the PDP business.

“We have to obtain sufficient returns [from the PDP business],” he said, indicating he intended to stick to the business until it provided sufficient profit to justify last year’s acquisition.

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