Building a Strong Earnings Base

「Both businesses are expected to generate net sales and segment profit above the initial plan.」

「ROE for the fiscal year was 11.5%, ordinary profit was ¥6,078 million, and net profit attributable to owners of the parent was ¥4,955 million.」

「ROE exceeded the target of 6% or more in each year of V73, with the average for the period reaching 8.7%.」

「As a result, consolidated results for the cumulative period through the third quarter were net sales of ¥10,835.1 million, down 14.1% year on year, operating profit of ¥390.8 million, down 28.8%, ordinary profit of ¥250.3 million, down 37.9%, and net profit attributable to owners of the parent of ¥175.4 million, down 41.4%.」

「Against this backdrop, the Group worked to improve profitability through business portfolio reform and expand its operations in growth markets. In the Devices business, it focused on expanding existing businesses and establishing new earnings foundations, while in the Solutions business it worked to expand service-based businesses and enhance its digital technologies, as well as broaden its customer base. As a result, consolidated results for the cumulative period through the second quarter were net sales of ¥7,431.1 million, down 10.5% year on year, operating profit of ¥283.7 million, down 33.2%, ordinary profit of ¥187.7 million, down 36.0%, and net profit attributable to owners of the parent of ¥129.1 million, down 40.2%.」

「Against this backdrop, the Group worked to improve profitability through business portfolio reform and expand its operations in growth markets. In the Devices business, it focused on expanding existing businesses and establishing new earnings foundations, while in the Solutions business it worked to expand service-based businesses and enhance its digital technologies, as well as broaden its customer base. As a result, consolidated results for the cumulative period through the first quarter were net sales of ¥3,299.9 million, down 7.5% year on year, operating profit of ¥97.7 million, down 49.9%, ordinary profit of ¥55.2 million, down 52.6%, and net profit attributable to owners of the parent of ¥18.2 million, down 76.1%.」

「Against this backdrop, our group worked to improve earning power through business structural reform and expand businesses in growth markets. In the Device Business, we worked to expand existing businesses and establish new profit bases. In the Solutions Business, we worked to expand service-based businesses and enhance digital technologies, while also focusing on expanding the customer base. As a result, consolidated net sales for the cumulative third quarter were ¥126,082 million, up 41.3% year on year, operating profit was ¥5,487 million, up 133.2%, and ordinary profit was ¥4,028 million, up 107.7%. Quarterly net income attributable to owners of the parent was ¥2,994 million, up 113.8%.」

「Against this backdrop, our group worked to improve earning power through business structural reform and expand businesses in growth markets. In the Device Business, we worked to expand existing businesses and establish new profit bases. In the Solutions Business, we worked to expand service-based businesses and enhance digital technologies, while also focusing on expanding the customer base. As a result, consolidated net sales for the cumulative second quarter were ¥82,994 million, up 45.5% year on year, operating profit was ¥4,247 million, up 215.5%, and ordinary profit was ¥2,934 million, up 155.8%.」

「Against this backdrop, our group worked to improve earning power through business structural reform and expand businesses in growth markets. In the Device Business, we worked to expand existing businesses and establish new profit bases. In the Solutions Business, we worked to expand service-based businesses and enhance digital technologies, while also focusing on expanding the customer base. As a result, consolidated net sales for the cumulative first quarter were ¥35,675 million, up 45.5% year on year, and operating profit was ¥1,953 million, up 322.9%. Ordinary profit increased 249.6% to ¥1,165 million, mainly because foreign exchange losses arose from fluctuations in exchange rates, principally in the elimination of intercompany transactions with subsidiaries. Quarterly net income attributable to owners of the parent increased 290.4% to ¥766 million.」

「Against this backdrop, in the Device Business, our group worked on portfolio reform by improving the profitability of existing businesses and developing new high-margin businesses. In the Solutions Business, we worked to establish a subscription-based business model, expand our capabilities in the latest digital technologies, and increase the customer base. As a result, consolidated net sales for the cumulative third quarter were ¥89,222 million, up 5.3% year on year. Operating profit increased 121.0% to ¥2,352 million, ordinary profit increased 119.1% to ¥1,939 million, and quarterly net income attributable to owners of the parent increased 115.4% to ¥1,400 million.」

「Against this backdrop, in the Device Business, our group worked on portfolio reform by improving the profitability of existing businesses and developing new high-margin businesses. In the Solutions Business, we worked to establish a subscription-based business model, expand our capabilities in the latest digital technologies, and increase the customer base. As a result, consolidated net sales for the cumulative second quarter were ¥57,047 million, up 5.7% year on year. Operating profit increased 140.9% to ¥1,346 million, and ordinary profit increased 139.3% to ¥1,147 million.」

「Against this backdrop, in the Device Business, our group worked on portfolio reform by improving the profitability of existing businesses and developing new high-margin businesses. In the Solutions Business, we worked to establish a subscription-based business model, expand our capabilities in the latest digital technologies, and increase the customer base. As a result, aided by a significant improvement in the Device Business from the same period of the previous year, consolidated net sales for the cumulative first quarter were ¥24,514 million, up 12.7% year on year, operating profit was ¥461 million, compared with an operating loss of ¥80 million, and ordinary profit was ¥333 million, compared with an ordinary loss of ¥61 million.」

「As a result, for the cumulative third quarter of the current consolidated fiscal year, consolidated net sales were ¥84,760 million, down 12.0% year on year. Although the gross margin improved and SG&A expenses declined, operating profit fell short of offsetting the decrease in net sales, declining 23.4% to ¥1,064 million. Ordinary profit declined 30.3% to ¥885 million, and quarterly net income attributable to owners of the parent declined 24.3% to ¥650 million.」

「As a result, for the cumulative second quarter of the current consolidated fiscal year, consolidated net sales were ¥53,970 million, down 18.7% year on year. In terms of profit and loss, although SG&A expenses declined, the decrease in gross profit resulted in operating profit of ¥558 million, down 53.1% year on year, and ordinary profit of ¥479 million, down 57.1%.」

「Against this backdrop, in the Device Business, following the termination at the end of June of the authorized distributorship agreement with Renesas Electronics Corporation, formerly a major supplier, our group shifted human resources toward expanding sales of products made by overseas semiconductor manufacturers and worked to fundamentally transform its profit structure by developing new products and business models focused on automotive applications and AI/IoT. In the Solutions Business, we focused on strengthening the cloud business centered on Sanshin Data Center to establish a future profit base, while also enhancing initiatives to expand the customer base. As a result, for the cumulative first quarter of the current consolidated fiscal year, consolidated net sales were ¥21,758 million, down 19.7% year on year. In terms of profit and loss, although SG&A expenses declined, the decrease in gross profit resulted in an operating loss of ¥80 million, compared with operating profit of ¥247 million in the same period of the previous year, and an ordinary loss of ¥61 million, compared with ordinary profit of ¥218 million.」

「Meanwhile, because there has been no change in treating ROE and ordinary profit as our group's important management indicators, we will focus on strengthening the necessary business foundations with the aim of restoring these two indicators and will work diligently on the following challenges.」

「Under the V70 Medium-Term Management Plan, whose final fiscal year is the fiscal year ending March 2021, our group worked toward achieving 5% ROE and ordinary profit of ¥3,000 million. In the Device Business, we sought to increase sales of the core device business, where higher value added is possible, and the strategic device business, centered on handling new overseas products and IoT-related businesses. At the same time, we focused on shifting to a high-profitability structure by optimizing the generally low-margin volume business based on an assessment of its risks and profitability. In the Solutions Business, we worked to establish a future profit base by strengthening the cloud business centered on Sanshin Data Center and enhancing initiatives to expand the customer base.」

「As a result, for the cumulative second quarter of the current consolidated fiscal year, consolidated net sales were ¥66,413 million, down 8.3% year on year. Operating profit increased 68.9% to ¥1,191 million due to an improved gross margin and reduced SG&A expenses. Ordinary profit also increased 103.1% to ¥1,118 million, as non-operating income and expenses improved compared with the same period of the previous year, when costs related to the acquisition of treasury shares were recorded.」

「Under the V70 Medium-Term Management Plan, whose final fiscal year is the fiscal year ending March 2021, our group worked toward achieving 5% ROE and ordinary profit of ¥3,000 million. In the Device Business, we sought to increase sales of the core device business, where higher value added is possible, and the strategic device business, centered on handling new overseas products and IoT-related businesses. At the same time, we focused on shifting to a high-profitability structure by optimizing the generally low-margin volume business based on an assessment of its risks and profitability. In the Solutions Business, we worked to establish a future profit base by strengthening the cloud business centered on Sanshin Data Center and enhancing initiatives to expand the customer base.」

「Profitability improved through an improved gross margin resulting from a higher proportion of highly profitable businesses and reductions in SG&A expenses through workforce optimization, but」

「As a result, for the cumulative third quarter of the current consolidated fiscal year, consolidated net sales were ¥115,139 million, down 3.6% year on year. Operating profit increased 14.8% to ¥1,263 million due to an improved gross margin and reduced SG&A expenses. Ordinary profit increased 6.3% to ¥1,101 million despite higher non-operating expenses, including increased interest expenses and the recognition of costs related to the acquisition of treasury shares. Quarterly net income attributable to owners of the parent increased 96.7% to ¥747 million because extraordinary losses decreased from the same period of the previous year, when special retirement payments were recorded in connection with a voluntary retirement program.」

「Operating profit was ¥705 million, up 6.7% year on year, due to an improved gross margin and reductions in SG&A expenses. Ordinary profit was ¥550 million, down 13.0% year on year, due to higher non-operating expenses, including increased interest expenses and the recognition of costs related to the acquisition of treasury shares. However, quarterly net income attributable to owners of the parent was ¥433 million, up 21.7% year on year, because extraordinary losses decreased from the same period of the previous year, when special retirement payments were recorded in connection with a voluntary retirement program.」

「As a result, for the cumulative first quarter of the current consolidated fiscal year, consolidated net sales were ¥29,387 million, down 16.5% year on year, and operating profit was ¥8 million, down 91.4% year on year. However, due to an increase in non-operating expenses, including interest expenses, the company recorded an ordinary loss of ¥79 million, compared with ordinary profit of ¥125 million in the same period of the previous year.」

「ROE for the current consolidated fiscal year was 1.5% (not stated for the previous fiscal year because a net loss attributable to owners of the parent was recorded), and ordinary profit was ¥1,787 million, compared with an ordinary loss of ¥952 million in the previous fiscal year. This was mainly due to a recovery in results resulting from an improved gross margin through a higher proportion of highly profitable businesses, fixed-cost reductions through consolidation and closure of business sites and workforce optimization, and a reduction in foreign exchange losses.」

「As a result, for the cumulative third quarter of the current consolidated fiscal year, consolidated net sales were ¥119,452 million, down 3.6% year on year, operating profit was ¥1,100 million, up 160.5% year on year, and ordinary profit was ¥1,036 million, compared with an ordinary loss of ¥1,328 million in the same period of the previous year.」

「Against this backdrop, our group is diligently implementing the V70 Medium-Term Management Plan. In the Device Business, we pursued business portfolio reform centered on concentrating resources in areas expected to experience market growth and increasing the sales proportion of highly profitable businesses, while also working to improve the profitability of existing businesses through thorough inventory and foreign exchange risk management and more efficient operations. In the Solutions Business, we worked to close business opportunities and establish a profit base for medium- to long-term growth by expanding the range of cloud services and creating synergies between business units. As a result, for the cumulative second quarter of the current consolidated fiscal year, consolidated net sales were ¥78,906 million, down 7.5% year on year, operating profit was ¥661 million, compared with an operating loss of ¥192 million, and ordinary profit was ¥633 million, compared with an ordinary loss of ¥1,684 million.」

「Against this backdrop, under the V70 Medium-Term Management Plan, whose final fiscal year is the fiscal year ending March 2021, our group worked toward achieving 5% ROE and ordinary profit of ¥3,000 million. In the Device Business, we pursued business portfolio reform centered on focusing on areas expected to experience market growth and increasing the proportion of highly profitable businesses, while also working diligently to improve the profitability of existing businesses through foreign exchange and inventory risk management, voluntary retirement programs to optimize staffing, and more efficient operations. In the Solutions Business, we worked to close identified business opportunities and establish a profit base for medium- to long-term growth by expanding the range of cloud services and creating synergies between business units through the sharing of customer assets. As a result, for the cumulative first quarter of the current consolidated fiscal year, consolidated net sales were ¥35,192 million, down 9.9% year on year, operating profit was ¥97 million, compared with an operating loss of ¥470 million in the same period of the previous year, and ordinary profit was ¥125 million, compared with an ordinary loss of ¥1,494 million.」

「Under the V70 Medium-Term Management Plan beginning with the 66th fiscal year (fiscal year ending March 2017), our group worked on the measures necessary to strengthen our business capabilities and establish a stronger management foundation.」

「Against this backdrop, under the V70 Medium-Term Management Plan beginning with the 66th fiscal year (fiscal year ending March 2017), our group worked diligently on the measures necessary to strengthen our business capabilities and establish a stronger management foundation.」

「Under the V70 Medium-Term Management Plan, whose final fiscal year is the fiscal year ending March 2021, our group has worked diligently to strengthen our business capabilities and establish a stronger management foundation, with a view to achieving at an early stage a 2% ordinary profit margin and a 5% return on equity (ROE).」

「In the Device Business, we aim to establish a strong profit base by improving profitability through business portfolio reform. In the Solutions Business, we aim to do so by strengthening existing businesses and creating businesses that address new technologies such as cloud services.」