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Financial Results

FY2017 2Q Presentation

Date October 27, 2017
Presenter Satoshi Hirano, President & CEO

Presentation Materials

. FY2017 2Q Financial Results (10pages)[921KB]
. FY2017 Full Year Plan(21pages) [2,339KB]
. Appendix(3pages) [286KB]

Summary of the Presentation

1. Consolidated earnings for the second quarter of FY2017.

Earnings recovery

Net sales were 68,046 million yen, a year-on-year increase of 17% thanks to higher sales, particularly in Japan, the U.S.A., Europe, Asia, and Oceania. This increase in net sales resulted in operating income of 4,570 million yen (122% YoY) and ordinary income of 4,088 million yen (183% YoY). As a result, net income attributable to owners of parent was 1,867 million yen (294% YoY).

FY2017 1Q 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]
Growth in sales of IT construction and the recovery of IT agriculture resulted in net sales of 35,884 million yen (132% YoY). Operating income increased significantly to 3,869 million yen (157% YoY) thanks to increased revenues.

[Smart Infrastructure Business]
Sales growth attributable to the accelerating popularity of i-Construction in Japan and increased sales in Asia and the Middle East resulted in net sales of 17,042 million yen (114% YoY) and operating income of 1,630 million yen (118% YoY).

[Eye Care Business]
While sales in Europe saw a temporary downturn, sales growth for the 3D OCT and the fundus camera TRC-NW400 as well as favorable sales in other regions, including India and other parts of Asia and Latin America resulted in net sales of 21,397 million yen (109% YoY). However, operating income was 526 million yen (41% YoY) due to increased expenses related to R&D and other forward-looking investments as well as the impact of a temporary lull in sales in Europe.

2. FY2017 Consolidated Earnings Targets

Our earnings forecast for the cumulative consolidated first six months of FY2017 and the current consolidated period reflect the current condition of increased net sales relative to our earnings forecast released on July 28, 2017. We have revised our earnings forecast for the full-year to net sales of 138,000 million, up 5,000 million yen (3.8% against previous forecast). For income, there is no change in our forecasts released on July 28, 2017 for operating income, ordinary income, net income attributable to owners of parent, and net income.
We will continue to monitor transitions in performance and market trends, and make timely disclosure in the event of circumstances requiring the need for a review of our earnings forecasts.

FY2017 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.
*2 Assumed exchange rate after October 2017 is ¥105/dollar and ¥115/euro.


Tell us why your full-year forecast for operating income is unchanged despite you conducting an upward revision of your full-year forecast for net sales to reflect increased sales during the first half.

Leaving our operating income forecast reflect the possibility that we may further accelerate investments relative to the expected increase in income during the second half.

Tell us about the forward-looking investments conducted in the positioning business.

Although we cannot disclose specific details, these are mainly centered on investments in new technology development in IT construction and IT agriculture.

What scale do you expect the Eye Care Business IoT business will reach next fiscal year and beyond?

Our 3rd Mid-Term Business Plan (FY2019-FY2021) outlines 20% of sales as a common target for all businesses.

Relative to the current fiscal year, how much do you expected to budget for the entire company towards forward-looking investments next fiscal year and beyond?

Our investment budget for next fiscal year will not decline. However, we do expect the ratio of investments relative to sales will decline because of the high growth potential of the healthcare, agriculture and infrastructure segments. We view that now is not the time to stop investing.

What areas will you target for forward-looking investments (for example, human resources)?

Investments in human resources are our highest priority. To promote the growth of the IT construction business, Positioning and Smart Infrastructure are focusing on securing and training staff specialized in civil engineering. To promote the IoT business, Eye Care hired IoT professionals and established a new organization in the U.S.A.

What are the region-specific growth rates for IT construction and IT agriculture?

IT construction is growing by 120-130% in Europe, the U.S.A., and Australia while IT agriculture is growing by the same rate in Europe and the U.S.A. In Japan, i-Construction is growing and IT agriculture has grown by 300% but the actual amounts are relatively minor.

Is it correct to understand that the company as it stands today is evolving in line with the ideal situation you outlined 2-3 years ago for 2020 and beyond?

Yes, that would be correct. The issue of improved productivity facing the healthcare, agriculture and infrastructure segments in which we operate is an unresolved issue. Our level of recognition in the IT construction and IT agriculture markets is increasing gradually and we are confident that we will continue to have strong growth potential.

* "i-Construction" is a registered trademark of National Institute for Land and Infrastructure Management, MLIT, JAPAN.

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