Sustained Growth Based on Stable Earnings

「Sales and operating profit got off to a start broadly in line with expectations.」

「Revenue was ¥421.6 billion, down ¥30.8 billion from the previous fiscal year. Operating profit was ¥18.8 billion, up ¥0.2 billion; ordinary profit was ¥20.8 billion, up ¥4.0 billion; and net income attributable to owners of the parent was ¥21.5 billion, up ¥9.0 billion. Although revenue was affected by the completion of large Enterprise Solutions projects, Public Solutions performed strongly, securing revenue at a certain level and keeping operating profit broadly in line with the previous year.」

「During the interim consolidated accounting period, the completion of large projects, including projects related to the new banknotes, resulted in revenue of ¥179.4 billion, down ¥18.3 billion, or 9.2%, from the same interim period of the previous year. Operating profit was ¥1.2 billion, down ¥5.0 billion, or 80.4%; ordinary profit was ¥0.9 billion, down ¥3.6 billion, or 80.9%; and interim net income attributable to owners of the parent was ¥0.6 billion, down ¥1.8 billion, or 75.3%.」

「During the interim consolidated accounting period, revenue was ¥197.7 billion, up ¥22.8 billion, or 13.0%, from the same interim period of the previous year, mainly due to the steady capture of large projects that continued from the second half of the previous fiscal year. In terms of earnings, in addition to the benefit of higher revenue, the effect of higher component costs in the same interim period of the previous year had fallen away, resulting in operating profit of ¥6.2 billion, up ¥5.2 billion, or 513.4%. Ordinary profit was ¥4.5 billion, up ¥4.0 billion, or 835.0%, despite deterioration in foreign exchange gains and losses, among other factors. Interim net income attributable to owners of the parent was ¥2.4 billion, up ¥2.1 billion, or 736.5%.」

「Although the basic policy of Medium-Term Management Plan 2025 is to “turn toward growth and break away from contractionary equilibrium,” in fiscal 2023, the first year of the plan, revenue increased by ¥52.8 billion year on year to ¥421.9 billion and operating profit increased by ¥16.3 billion to ¥18.7 billion. We achieved substantial year-on-year increases in both revenue and profit and took a solid first step.」

「During the cumulative third quarter of the current fiscal year, revenue was ¥286.6 billion, up ¥30.0 billion, or 11.7%, year on year. Although personnel expenses and fixed costs increased due to growth investments, higher revenue and other factors resulted in operating profit of ¥5.8 billion, an improvement of ¥10.6 billion. Excluding the one-time income of ¥4.3 billion from the reversal of the allowance for doubtful accounts on ATM receivables from China recorded in the first quarter, operating profit still increased year on year. Ordinary profit was ¥4.8 billion, an improvement of ¥12.7 billion, due to improved foreign exchange gains and losses, among other factors. Net income attributable to owners of the parent for the quarter was ¥2.0 billion, an improvement of ¥13.6 billion.」

「During the cumulative second quarter of the current fiscal year, revenue was ¥174.9 billion, up ¥12.1 billion, or 7.4%, year on year. Revenue increased due to an improvement in the production decline caused by difficulties in procuring components and higher volumes from large projects that had commenced. Although costs for components procured in the previous period and personnel expenses increased, higher revenue resulted in operating profit of ¥1.0 billion, an improvement of ¥5.0 billion. Excluding the one-time income of ¥4.3 billion from the reversal of the allowance for doubtful accounts on ATM receivables from China recorded in the first quarter, operating profit still increased year on year. Ordinary profit was ¥0.5 billion, an improvement of ¥5.4 billion, due to improved foreign exchange gains and losses, among other factors. Net income attributable to owners of the parent for the quarter was ¥0.3 billion, an improvement of ¥6.0 billion.」

「During the cumulative first quarter of the current fiscal year, revenue was ¥81.5 billion, up ¥3.4 billion, or 4.3%, year on year. Although higher costs for components procured in the previous period and increased personnel expenses offset the benefit of higher revenue, the recognition of ¥4.3 billion in reversed allowance for doubtful accounts on ATM receivables from China resulted in operating loss of ¥0.0 billion, an improvement of ¥3.0 billion. Ordinary loss was ¥0.3 billion, an improvement of ¥2.8 billion, due to increased interest expenses and other factors. Net loss attributable to owners of the parent for the quarter was ¥0.2 billion, an improvement of ¥3.0 billion.」

「During the cumulative third quarter of the current fiscal year, revenue was ¥256.6 billion, up ¥10.2 billion, or 4.1%, year on year. The negative impact of lower production due to prolonged component shortages, including semiconductors, continued, but revenue increased due to the carryover of projects from the previous year and the positive effect of foreign exchange. In terms of earnings, the negative effects of foreign exchange and the reversal of one-time income recorded in the same period of the previous year were significant, resulting in operating loss of ¥4.8 billion, a deterioration of ¥4.7 billion. Ordinary loss was ¥7.9 billion, a deterioration of ¥8.0 billion, due to deterioration in non-operating foreign exchange gains and losses, among other factors. Net loss attributable to owners of the parent for the quarter was ¥11.6 billion, a deterioration of ¥5.4 billion, partly because extraordinary losses associated with restructuring declined.」

「During the cumulative second quarter of the current fiscal year, revenue was ¥162.8 billion, up ¥3.0 billion, or 1.8%, year on year. Although production was affected by component shortages, including semiconductors, revenue increased due to the carryover of projects from the previous year and the positive effect of foreign exchange. In terms of earnings, positive factors such as higher volumes and fixed-cost reductions offset the negative impact of supply chain disruptions, and operating loss improved by ¥0.2 billion to ¥4.0 billion. Ordinary loss deteriorated by ¥0.8 billion to ¥4.9 billion due to a decline in non-operating foreign exchange gains, among other factors.」

「During the cumulative first quarter of the current fiscal year, revenue was ¥78.1 billion, down ¥1.8 billion, or 2.2%, year on year. Although foreign exchange had a slight positive effect on revenue, the significant impact of lower production due to component shortages, including semiconductors, resulted in lower revenue. Supply chain impacts were offset by positive factors including fixed-cost reductions and project mix differences, resulting in operating loss of ¥3.0 billion, a deterioration of ¥0.1 billion.」

「Although the effects of component shortages, lower volumes and other supply chain impacts were partly offset by fixed-cost reductions from restructuring, operating loss improved by ¥2.2 billion year on year to ¥0.4 billion, partly due to the reversal of ¥3.1 billion in allowance for doubtful accounts on ATM receivables from China.」

「During the cumulative second quarter of the current fiscal year, revenue was ¥159.8 billion, down ¥13.7 billion, or 7.9%, year on year. Although the restructuring of the Information Equipment business made steady progress, supply chain disruptions, centered on component shortages and higher raw material prices, resulted in operating loss of ¥4.4 billion, a deterioration of ¥1.8 billion.」

「During the cumulative first quarter of the current fiscal year, revenue was ¥79.9 billion, down ¥1.5 billion, or 1.9%, year on year. Although higher component prices, including semiconductors, were offset by lower fixed costs, the impact of lower volumes was significant, resulting in operating loss of ¥3.0 billion, a deterioration of ¥1.9 billion. The supply chain disruptions are estimated to have had a negative impact of approximately ¥0.7 billion on operating profit; excluding this impact, progress was broadly in line with the plan.」

「Revenue was ¥392.9 billion, a decline of ¥64.3 billion from the previous consolidated fiscal year. Operating profit was ¥9.5 billion, down ¥7.3 billion, and ordinary profit was ¥9.4 billion, down ¥4.4 billion. Net loss attributable to owners of the parent was ¥0.2 billion, a deterioration of ¥14.3 billion, due to the recognition of ¥4.6 billion in business restructuring costs associated with a review of the business portfolio and the reversal of part of deferred tax assets, among other factors.」

「During the cumulative third quarter of the current fiscal year, revenue was ¥266.9 billion, down ¥61.0 billion, or 18.6%, year on year. The decline following the previous fiscal year's large projects and the change in the revenue recognition criteria affected results. In addition, the transfer of the Brazilian subsidiary's business and the impact of COVID-19 overlapped with other factors, resulting in a significant decline in revenue. As a result, operating loss was ¥2.6 billion, a deterioration of ¥11.7 billion, and ordinary loss was ¥3.4 billion, a deterioration of ¥10.7 billion.」

「During the cumulative second quarter of the current fiscal year, revenue was ¥173.5 billion, down ¥44.9 billion, or 20.5%, year on year. The global spread of COVID-19 continued, with its effects particularly pronounced in the European market. Revenue also declined due to the completion of large projects related to networks for telecommunications carriers recorded in the previous fiscal year and the transfer of the Brazilian subsidiary's business. As a result of this significant decline in revenue, operating loss was ¥2.6 billion, a deterioration of ¥7.8 billion, and ordinary loss was ¥3.2 billion, a deterioration of ¥6.1 billion.」

「During the cumulative first quarter of the current fiscal year, revenue was ¥81.4 billion, down ¥26.2 billion, or 24.4%, year on year. This was mainly affected by the decline following the large network construction project for telecommunications carriers and large-scale replacement demand from government agencies in the previous fiscal year. Revenue also fell due to the transfer of the Brazilian subsidiary's business and sluggish overseas sales resulting from the spread of COVID-19. As a result of this significant decline in revenue, operating loss was ¥1.1 billion, a deterioration of ¥2.2 billion, and ordinary loss was ¥2.1 billion, a deterioration of ¥2.2 billion.」

「During the cumulative third quarter of the current fiscal year, the continued strong performance of the Information and Communications business drove overall results, and revenue was ¥327.9 billion, up ¥28.6 billion, or 9.5%, year on year. In addition to higher revenue, the effects of business restructuring implemented in the Mechatronics Systems business in the previous year resulted in operating profit of ¥9.1 billion, up ¥4.1 billion, and ordinary profit of ¥7.3 billion, up ¥4.5 billion.」

「During the cumulative second quarter of the current fiscal year, the solid performance of the Information and Communications business drove overall results, and revenue was ¥218.4 billion, up ¥24.8 billion, or 12.8%, year on year. In addition to higher revenue, the steady effects of business restructuring implemented in the Mechatronics Systems business in the previous year resulted in operating profit of ¥5.2 billion, up ¥4.4 billion, and ordinary profit of ¥2.9 billion, an improvement of ¥3.7 billion.」

「As a result of these initiatives in each business, although performance varied by segment, the Information and Communications business drove overall results. Revenue was ¥107.6 billion, up ¥18.7 billion, or 21.0%, year on year. Operating profit was ¥1.1 billion, an improvement of ¥1.9 billion, due to the effect of higher revenue in the Information and Communications business and the benefits of business restructuring implemented in the previous year in the Mechatronics Systems business. Ordinary profit was ¥0.1 billion, an improvement of ¥1.8 billion.」

「Operating profit was ¥5.0 billion, an improvement of ¥7.8 billion year on year, due to improved profitability resulting from differences in the mix of projects in the Information and Communications business, fixed-cost reductions accompanying business restructuring in the Printer business, and the weaker yen. Ordinary profit was ¥2.8 billion, an improvement of ¥4.5 billion, as the improvement in operating profit offset foreign exchange losses of ¥1.5 billion recorded as non-operating expenses.」

「Operating profit was ¥0.8 billion, an improvement of ¥4.9 billion year on year, due to improved profitability resulting from differences in the mix of projects in the Information and Communications business, fixed-cost reductions accompanying business restructuring in the Printer business, and the weaker yen. Ordinary loss was ¥0.8 billion, an improvement of ¥2.5 billion, as the improvement in operating profit offset foreign exchange losses of ¥1.5 billion recorded as non-operating expenses. Net loss attributable to owners of the parent for the quarter was ¥2.6 billion, an improvement of ¥2.0 billion.」

「Against this business backdrop, the OKI Group's EMS business expanded steadily, partly due to the effect of newly consolidating OKI Electric Cable. The Printer business benefited from the weaker yen, while the Information and Communications business was affected by the loss of large network-related projects recorded in the same period of the previous year, and the Mechatronics Systems business no longer benefited from increased revenue resulting from the alignment of the accounting period of its Brazilian subsidiary. As a result, revenue was ¥88.9 billion, down ¥1.5 billion, or 1.6%, year on year. Operating loss was ¥0.8 billion, an improvement of ¥3.1 billion, due to differences in project mix in the Information and Communications business and the effects of business restructuring and the weaker yen in the Printer business.」

「Against this business backdrop, the OKI Group's Information and Communications and EMS businesses performed well, while the Printer business benefited from the weaker yen. However, weak ATM sales in overseas markets continued in the Mechatronics Systems business, resulting in revenue of ¥300.0 billion, down ¥4.9 billion, or 1.6%, year on year. Operating loss was ¥2.8 billion, a deterioration of ¥3.2 billion, due to lower volumes, product mix differences and other factors.」

「The OKI Group's businesses were generally performing well in the Information and Communications and EMS businesses. However, weak ATM business in emerging markets in the Mechatronics Systems business resulted in revenue of ¥194.0 billion, down ¥5.3 billion, or 2.7%, year on year. Operating loss was ¥4.1 billion, a deterioration of ¥3.5 billion, mainly due to lower volumes and product mix differences.」

「Under the previous medium-term management plan, significant progress was made in improving the financial structure. However, in terms of earning power, we were unable to sustain the earnings margin target once it had been achieved.」

「Under its corporate philosophy, the OKI Group (the Company and its consolidated subsidiaries) aims to become a company that generates stable earnings and grows steadily.」

「With the aim of achieving sustainable growth through continued investment funded by securing stable earnings, we made steady progress and achieved improvements in the operating margin of the Information and Communications business, our largest segment, as well as in the equity ratio and DE ratio. However, due to various changes in the business environment, including an economic slowdown in emerging markets, increased foreign exchange risk and intensifying competition, we had to revise the target figures for fiscal 2016, the final year of the plan.」