Japan's Pioneer plans to end production of plasma display panels as part of a restructuring program to return its operations to profit, it announced this week.

Pioneer's operating profit in the just-ended financial year fell 12.7 percent compared to the year earlier, to YEN 10.9 billion (US$105.2 million), it said. The lower profits were largely a result of deeper losses in the consumer electronics business, where sales of PDP televisions dropped in North America and Europe. Pioneer's consumer electronics losses increased to YEN 18 billion from YEN 15.8 billion in the previous year.

The company's restructuring plan will see it end basic panel production at two factories in Japan by March 2009. In their place the company will buy panels from Panasonic and use those to make PDP TVs under a provisional agreement with Panasonic. As part of the deal some of Pioneer's plasma display panel know-how will be transferred to Panasonic and the two companies will work jointly on display development, it said.

The PDP TV sector has been hit in recent years by increasing competition from the rival LCD (liquid crystal display) technology. In the past PDP had a cost advantage at large screen sizes of around 42-inches and greater but the price of LCD TVs has come down with advances in production. As a result there is a much fiercer battle going on in the market and Pioneer has been hit by that competition.

Pioneer plans to enter the LCD TV business in Europe from August, initially by selling televisions produced by Sharp. Going forward Pioneer plans to develop its own LCD televisions and use only panels from Sharp. The arrangement will be similar to that with Panasonic for PDPs and could also involve the two companies working together on panel development.

Together the measures are expected to reduce operating expenses in Pioneer's display business by YEN 15 billion in the fiscal year from April 2009.

In a related move Pioneer said it plans to reassign about 200 engineers from its display group to its car entertainment and professional audio and video group.