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Financial Results

FY2016 Presentation

Date April 28, 2017
Presenter Satoshi Hirano, President & CEO

Presentation Materials


. FY2016 Financial Results (10pages)[864KB]
. FY2017 Full Year Plan(22pages) [3,211KB]
. Appendix(3pages) [277KB]

Webcast

動画配信[36min]

Summary of the Presentation

1. FY2016 Financial Results

Earnings recovered smoothly

Significant yen appreciation compared to last year (-11.1 yen against USD, -13.0 yen against euro) caused reduced net sales (128,387 million yen) but sales increased by volume in each region, resulting in a substantial increase in revenues of 6.4% when excluding the impact of foreign currency.
Operating income (9,551 million yen) increased by 8.5% when including the impact of foreign currency and by the substantial rate of 37.0% when excluding the impact of foreign currency. This was due to increased income attributable to greater sales volume and to the benefits of efforts to reduce fixed costs, and other initiatives.
Ordinary income (7,622 million yen) increased by 3.5% and by the substantial rate of 39.7% when excluding the impact of foreign currency. Net income attributable to owners of the parent was 4,395 million yen, an increase of 4.7% and by the substantial rate of 50.9% when excluding the impact of foreign currency.

FY2016 Financial Results

*1 According to change in Japanese Accounting Standards, the former Net Income is shown as "Profit attributable to owners of parent" on financial statements.

Financial Results by segment

[Positioning Company]
Net sales were 60,602 million yen thanks to growth in IT construction projects and year-on-year increases from IT agriculture for three consecutive quarters. Operating income was 5,596 million yen, a significant improvement compared to the previous fiscal year (up 3,211 million yen) thanks to the effect of new products, reductions to fixed costs, and cost reductions.

[Smart Infrastructure Business]
Net sales were 33,091 million yen and operating income was 3,939 million yen. Although i-Construction sales in Japan increased and net sales in China and other parts of Asia improved, sales declined in Middle Eastern and South American markets.
* "i-Construction" is a registered trademark of National Institute for Land and Infrastructure Management, MLIT, JAPAN.

[Eye Care Business]
Net sales were 43,148 million yen. Despite the successful launch of the 3D OCT Maestro in the US and favorable OCT sales on the Chinese eye examination market, yen appreciation resulted in decline in price competitiveness in European markets and market competition in Japan intensified. Operating income was 2,598 million yen due to the impact of increased expenses related to forward-looking investments.

2. FY2017 Full Year Plan

Looking at forecasts for FY2017, we expect the capacity for economic recovery in overseas markets will continue to be weak due to the risks of economic downturn caused by a lack of transparency in US political trends and continued economic stagnancy in certain regions such as the Middle East and South America. On the other hand, despite the lack of transparency on in overseas markets, Japan will continue to see mild recovery focused on internal demand.
Our consolidated earnings forecast for FY2017 is net sales of 131,000 million yen (up 2% compared to FY2016), operating income of 12,000 million yen (up 25.6% compared to FY2016), ordinary income of 10,000 million yen (up 31.2% compared to FY2016), and net income attributable to owners of the parent of 5,700 million yen (up 29.7% compared to FY2016). Furthermore, the assumed currency rates for our full-year earnings forecast are 105 yen/1 USD and 115 yen/1 euro.

FY2016 Full Year Plan
*1 According to change in Japanese Accounting Standards, the former Net Income is shown as "Profit attributable to owners of parent" on financial statements.

Q&A

Tell us about your current sensitivity to foreign currency.

Our foreign currency sensitivity (relative to operating income) is an impact of 150 to 200 million yen for the USD and 70 to 100 million yen for the euro.

Your FY2017 forecast for sales growth for the Positioning Business is a few percent but expectations were that this would be a bit higher because IT construction business in Japan and the US is favorable. Please tell us the reasons for this forecast.

IT agriculture is showing signs of recovery but the timing for a full-fledged recovery is unclear. Consideration of this factor is reflected in our forecast calculations.

What share of IT construction do you hold versus competitors and what is the status of OEM?

About 30-40% globally. Higher in Japan. i-Construction is a one-stop service that includes surveying, design, construction, and inspections. The goal is not simply construction but centralized management of all processes so our ability to provide full-scale support is an advantage.
Regarding OEM, our number of partners has increased three-fold compared to three years ago (Reference Material P. 18). This is believed to be more than competitors.

Can you provide specifics regarding the forward-looking investments discussed regarding the Eye Care Business? How much did you invest on what?

We used several hundred million in income generated by the successful sales launch of the US Maestro towards investments. In light of the favorable earnings from the Positioning & Smart Infrastructure Business, we decided to move forward with investments based on the awareness that the Company will have no problem achieving published figures.

Please tell us your projected growth in FY2017 for US sales of the Maestro.

FY2016 represented half a year's contributions but this fiscal year we are not counting on a full year's contributions to be double that of last year.

Please tell us about your income analysis comparing FY2016 - FY2017.

Compared to income in the FY2015-2016 analysis, we expect "Change in sales / Mix" to trend upward, "fixed costs/ cost reductions" to trend downward due to forward-looking investments in eye care, and "currency impact" to be around -900 million yen.

Operating income for FY2017 outlined in the MBP was 15 billion yen but based on foreign currency assumptions of 110 yen/ 1 USD and 115 yen / 1 euro, this becomes around 13 billion yen. Please tell us if the most recently released assumptions reflect factors that differ from the market environment, investment policies, and other factors indicated at the time of the MBP.

The divergence of approximately 800 million yen reflecting for foreign currency is the forward-looking investment in the Eye Care Business. This investment decision indicates our focus on achieving the third year goals of the MBP. For the Positioning & Smart Infrastructure Business, we are projecting better-than-expected progress.

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