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Top Message
The environment surrounding the Company
In the global economy during the first half of fiscal year ending in March 2012, there were heightened concerns about an economic slowdown in developed countries, mainly Europe and the U.S., and increased uncertainty about the future. Though the Japanese economy showed signs of a gradual recovery from the Great East Japan Earthquake, the historical appreciation of the yen progressed against the uncertain economic condition on the global basis, and we expect to remain in a difficult business situation as ever.
Under these circumstances, the Company has been implementing emergency measures called “Actions to be taken urgently” since the second half of the fiscal year ended in March 2011. While these measures aim to reduce fixed costs and variable costs, we expect to see significantly lower sales and an accompanying expansion of loss for our full-year results of the fiscal year ending in March 2012.
Causes of deterioration and measures
This deterioration in our performance is complex and there are many intertwined factors and background situations. I will explain them here by dividing them into external and internal factors.
External factors include a deterioration of exports due to the appreciation of the yen and volatility of demand and lower prices of products and services due to fierce competition in the IT industry in fields such as PCs and mobile phones, which are fields our main customers belong. They also include a postponed demand caused by the Great East Japan Earthquake.
An internal factor we recognize is that we failed to sufficiently implement measures including the full-scale reduction of costs and shifting our production plants to overseas locations to overcome some of those external factors, such as the appreciation of the yen and fierce price competition.
The strong yen, volatility of product demand and lower prices are not temporary phenomena, and they will continue in the future.
First, we will do our utmost to put an end to the current situation where we are running a deficit and reform our cost structure so that we can generate profits even in this challenging environment, aiming to build a solid business foundation for new growth. To this end, we need to reform our structure where our assets and personnel are proportional to the size of our lower sales, and in addition, to thoroughly improve productivity and reduce material costs (such as by raising the ratio of our items purchased from overseas) to reduce variable costs. In this way, we will build a solid revenue base.
On September 16, 2011, we announced the implementation of measures to strengthen structural reform with cost reduction in the amount of 9 billion yen. An outline is as follows.
1. Lower break-even point
1) Reduction of fixed costs (approx. 6.3 billion yen)
-Reduce depreciation by closing and disposing of production plants and facilities
-Reduce labor costs by further reducing the compensation paid to executives and
the salaries of managers, and offering voluntarily retirement of regular employees
-Reduce miscellaneous costs
2) Reduction of variable costs (approx. 2.7 billion yen)
2. Consolidate production sites
1) Close some plants in Japan for the Industrial Materials business and the Device business
2) Dispose of some assets for the Information and Communication business
3. Strengthen resiliency to appreciating yen
1) Accelerate the procurement of raw materials abroad
External factors include a deterioration of exports due to the appreciation of the yen and volatility of demand and lower prices of products and services due to fierce competition in the IT industry in fields such as PCs and mobile phones, which are fields our main customers belong. They also include a postponed demand caused by the Great East Japan Earthquake.
An internal factor we recognize is that we failed to sufficiently implement measures including the full-scale reduction of costs and shifting our production plants to overseas locations to overcome some of those external factors, such as the appreciation of the yen and fierce price competition.
The strong yen, volatility of product demand and lower prices are not temporary phenomena, and they will continue in the future.
First, we will do our utmost to put an end to the current situation where we are running a deficit and reform our cost structure so that we can generate profits even in this challenging environment, aiming to build a solid business foundation for new growth. To this end, we need to reform our structure where our assets and personnel are proportional to the size of our lower sales, and in addition, to thoroughly improve productivity and reduce material costs (such as by raising the ratio of our items purchased from overseas) to reduce variable costs. In this way, we will build a solid revenue base.
On September 16, 2011, we announced the implementation of measures to strengthen structural reform with cost reduction in the amount of 9 billion yen. An outline is as follows.
1. Lower break-even point
1) Reduction of fixed costs (approx. 6.3 billion yen)
-Reduce depreciation by closing and disposing of production plants and facilities
-Reduce labor costs by further reducing the compensation paid to executives and
the salaries of managers, and offering voluntarily retirement of regular employees
-Reduce miscellaneous costs
2) Reduction of variable costs (approx. 2.7 billion yen)
2. Consolidate production sites
1) Close some plants in Japan for the Industrial Materials business and the Device business
2) Dispose of some assets for the Information and Communication business
3. Strengthen resiliency to appreciating yen
1) Accelerate the procurement of raw materials abroad
Results of business operation for the first half of Fiscal Year 2012
For the results of the first half of Fiscal Year ending in March 2012, the lower demand and large fluctuations in demand for our mainstay business, the Industrial Materials business and the Devices business, largely affected our sales and profit.
On the other hand, as a result of the implementation of these reform measures to strengthen our structure, we recorded 9,678 million yen as business structure improvement expenses in the first half of the fiscal year. Furthermore, given our performance in the current fiscal year and expected performance in the future, we examined the recoverability of our deferred tax assets, and decided to impair part of our deferred tax assets.
As a result, consolidated results for the first two quarters of the fiscal year under review (April 1 to September 30, 2011) ended with sales of 44,087 million yen (down 19.2% year on year). On the profit end, we posted an operating loss of 4,181 million yen (in the same period of the previous fiscal year we posted an operating loss of 1,020 million yen). Moreover, we recorded an ordinary loss of 4,808 million yen (in the same period of the previous fiscal year we posted an ordinary loss of 1,441 million yen). In addition, we posted a quarterly net loss of 19,603 million yen (in the same period of the previous fiscal year we posted a quarterly net loss of 1,103 million yen).
On the other hand, as a result of the implementation of these reform measures to strengthen our structure, we recorded 9,678 million yen as business structure improvement expenses in the first half of the fiscal year. Furthermore, given our performance in the current fiscal year and expected performance in the future, we examined the recoverability of our deferred tax assets, and decided to impair part of our deferred tax assets.
As a result, consolidated results for the first two quarters of the fiscal year under review (April 1 to September 30, 2011) ended with sales of 44,087 million yen (down 19.2% year on year). On the profit end, we posted an operating loss of 4,181 million yen (in the same period of the previous fiscal year we posted an operating loss of 1,020 million yen). Moreover, we recorded an ordinary loss of 4,808 million yen (in the same period of the previous fiscal year we posted an ordinary loss of 1,441 million yen). In addition, we posted a quarterly net loss of 19,603 million yen (in the same period of the previous fiscal year we posted a quarterly net loss of 1,103 million yen).
For the future revival
We are already preparing for our future revival, at the same time implementing structural reforms as mentioned above. As an example, we redefine the areas and combination of our unique printing technology including the surrounding technologies, aiming to expand our business fields.
The Wireless Recharging Housing for Mobile Devices, which we released on September 15, 2011, is innovative new technology, combining Nissha’s printing technology and in-mold decorating technology with the electric field coupling wireless power transmission technology of Murata Manufacturing Co., Ltd. Widespread adoption in various fields and applications is anticipated.
Through the development of new products and expansion of market segments, we will continue to improve our business portfolio that now places too much emphasis on certain product lines and markets, and achieve more balanced one.
Company deals in a competitive markets for the products and services, and they have a nature of accelerated obsolescence and commoditization. Therefore, we always need to develop technologies and products that other companies cannot produce or that they need time to be able to produce. It will not be achieved, if we fear risks. Fostering the corporate culture to challenge toward the future, we aim to control and overcome the risks through a further disciplined decision making and work.
The Wireless Recharging Housing for Mobile Devices, which we released on September 15, 2011, is innovative new technology, combining Nissha’s printing technology and in-mold decorating technology with the electric field coupling wireless power transmission technology of Murata Manufacturing Co., Ltd. Widespread adoption in various fields and applications is anticipated.
Through the development of new products and expansion of market segments, we will continue to improve our business portfolio that now places too much emphasis on certain product lines and markets, and achieve more balanced one.
Company deals in a competitive markets for the products and services, and they have a nature of accelerated obsolescence and commoditization. Therefore, we always need to develop technologies and products that other companies cannot produce or that they need time to be able to produce. It will not be achieved, if we fear risks. Fostering the corporate culture to challenge toward the future, we aim to control and overcome the risks through a further disciplined decision making and work.
In closing
We apologize to our shareholders and investors with regards to our business performance and dividends. All executives and employees are working together to resolutely carry out and accomplish reforms measures to strengthen our structure so that we can return to profitability in the fiscal year ending March 2013.
We look forward to the continued support and encouragement of our shareholders and investors.
We look forward to the continued support and encouragement of our shareholders and investors.
November 4, 2011
Junya Suzuki
President and CEO
Representative Director of the Board
Junya Suzuki
President and CEO
Representative Director of the Board
