Operating Results and Financial Position (for the fiscal year ended March 31, 2011)

Transcription

1 SHIMADZU CORPORATION IR Group Corporate Strategy Planning Department 1 Nishinokyo-Kuwabaracho, Nakagyo-ku Kyoto Japan Tel: May 10, 2011 Operating Results and Financial Position (for the fiscal year ended March 31, 2011) 1. Operating Results (1) Consolidated Overview Japan's economy maintained a general recovery trend, due to factors such as increased exports, mainly to Asia, and the effects from economic measures. Overseas, the Asian economy expanded, primarily in China and India. In Europe, though financial crises are still a concern for some countries, the economic situation continues to improve in Germany and other major economies. In the United States, though unemployment has remained high, economic policy measures have also helped contribute to a continuing gentle economic recovery. Under such an environment, the Shimadzu Group designated the current fiscal year as the year to solidify its foundation to get back on a path of growth. We actively implemented measures to achieve growth, such as expanding our scope of operations in emerging countries, expanding our aftermarket business, and introducing products that provide high added value or outstanding performance for the cost. Meanwhile, the Group also pursued sustained growth by strengthening its marketing capabilities to build "the Shimadzu brand, trusted throughout the world," while also carrying out functional and process reforms to solidify its earnings foundation. As a result, for the current quarter, net sales were 252,707 million yen (year-on-year increase of 6.1%), operating income was 16,297 million yen (increase of 58.3%), ordinary income was 15,279 million yen (increase of 55.7%), and consolidated net income was 10,046 million yen (increase of 63.9%). Since Shimadzu's key production locations are located in the Kansai area, the Great East Japan Earthquake had no direct effect on production activities and did not significantly affect results. I. Analytical & Measuring Instruments In Japan, sales in governmental and academia markets have decreased somewhat from last year, which was boosted by demand from large scale economic stimulus programs. However, R&D investment and capital investment aimed at strengthening global competitiveness have recovered in private sector markets, due to improving corporate results and sales in some segments have been strong, such as in environmental and alternative energy-related fields. Consequently, overall sales increased from last year. In terms of product areas, liquid chromatographs sales continue to be strong and demand has recovered for testing machines, environmental measurement instruments, and gas chromatographs.

2 Overseas, with markets in Europe, the United States, and other developed countries gradually recovering and emerging countries, mainly in China, continuing to expand, overall sales increased. In Europe and the United States, sales of products such as mass spectrometers and surface analyzers have recovered due to expanding demand from economic recovery. In China, where the economy continues to expand, mainly due to domestic demand, sales of products such as liquid chromatographs, photometric analysis instruments, gas chromatographs, and surface analyzers have increased in fields such as pharmaceuticals, environment, and food safety. In India, where there is a significant market in pharmaceutical fields, the situation is starting to recover, so sales of liquid chromatographs, photometric analysis instruments, gas chromatographs, and surface analyzers have recovered. The segment earned net sales of 140,755 million yen (year-on-year increase of 4.7%). II. Medical Systems In Japan, due to improved profitability of private hospitals following revision of medical service fees in April 2010, demand increased for replacement of radiography systems, but sales were down at public and university hospitals, compared to last years levels, which were affected by supplementary budget appropriations. Consequently, overall sales decreased. Nevertheless, by focusing on selling radiography systems with digital capability, we achieved record unit sales of digital radiographic mobile X-ray systems. Overseas, overall sales decreased due to the strong yen and other factors, but sales increased in China, which is in the midst of implementing new healthcare reform policies that has resulted in continued active capital investment by hospitals. In Europe, sales of angiography systems were strong. This resulted in division sales of 49,551 million yen (year-on-year decrease of 1.8%). III. Aircraft Equipment In Japan, sales of equipment for the Japan Defense Ministry F-15 fighter modernization program remained firm, but overall sales decreased due to a lack of any major development programs this year. Overseas, sales decreased due to a decline in civilian aircraft demand resulting from fewer airline passengers and other factors and due to the strong yen. This resulted in division sales of 24,994 million yen (year-on-year decrease of 7.3%). IV. Industrial Machinery Demand for turbomolecular pumps, which is Shimadzu's primary industrial machinery product, increased due to a sharp recovery in the semiconductor market and other factors. Increased production capacity also helped to achieve record sales. Sales of solar cell film deposition systems recovered, mainly in Japan, due to increased capital investment by domestic solar panel manufacturers. Sales of hydraulic equipment have continued to recover, especially for industrial vehicle and construction equipment applications, resulting in significantly higher sales. This resulted in division sales of 29,171 million yen (year-on-year increase of 39.9%). V. Other Sales resulted in 8,234 million yen (year-on-year increase of 47.9%). 2

3 (2) Consolidated Outlook The global economy is expected to continue its gradual recovery, but due to the Great East Japan Earthquake, the Japanese economy is expected to remain weak for some time. The entire Shimadzu Group is committed to working collectively to support customers in recovering from the disaster and minimizing any effects it may have on sales, production, or other business activities. Analytical & Measuring Instruments: In Japan, though there are concerns regarding effects from the Great East Japan Earthquake, budgets for science research grants were increased for the public sector and ongoing investments are expected in private sector fields such as the environment, new energy, batteries, and new materials. Also, R&D investment is expected to continue to be strong in pharmaceutical fields. To accurately respond to new needs in such fields, we are increasing our competitive strength and expanding sales, mainly for liquid chromatographs, mass spectrometers, and gas chromatographs designed as products based on global strategies. Overseas, we aim to establish Shimadzu's position as a major brand in developed countries with large markets, such as Europe and the United States, where significant recovery is expected to continue, by actively introducing high-performance high-functionality products and implementing measures to expand market share. In China, where active demand is anticipated in both public and private sectors, we built an R&D center in Shanghai, where we are establishing a full range of local capabilities, from marketing and product planning to R&D and production, to promote developing products accurately tailored to local needs. In the future, by supplying market-specific products to emerging countries such as China, we will increase the competitive strength of local products. In addition to these measures, we will introduce new products including energy efficient models, strengthen development of field-specific applications, and make organizational adjustments, such as consolidating service subsidiaries, in an effort to provide solutions that will be chosen by customers around the world and achieve additional business growth. Medical Systems: In Japan, due in part to increased public spending on the Great East Japan Earthquake, there are concerns that capital investment at public and university hospitals will decrease. Even at private hospitals, we expect an increasing trend to postpone investment in anticipation of revision of medical service fees in Given these conditions, we aim to increase market share by introducing new digital radiography systems and work to stimulate demand mainly at major private and public hospitals. Overseas, developed countries, such as the United States and Europe, continue a gradual recovery. In China, markets are expanding from the coastal areas to the interior. Even in non-china emerging countries, there is increasing adoption of digital models and progress is being made on large projects. Consequently, sales are expected to increase. We will expand business by focusing on increasing sales of radiography systems equipped with wireless FPDs, use of which continues to expand rapidly, and by further developing our offering of low-cost radiography products designed for emerging countries. Aircraft Equipment: In Japan, there is some concern regarding effects from the Great East Japan 3

4 Earthquake, but overall, demand is expected to remain relatively flat. Given the current conditions, we anticipate that the civilian aircraft equipment market will be a long-term growth market. Therefore, we aim to expand business by improving profitability, including implementing cost-reduction measures and expanding our aftermarket business. Industrial Machinery: Investment in industrial machinery is expected to be active due to increased demand in semiconductor and liquid crystal applications, such as smart phones. For turbomolecular pumps, we plan to improve profitability by continuing to implement product improvements and cost reductions and promoting the aftermarket business. We aim to increase market share of solar cell film deposition systems by introducing, as soon as possible, new products that offer better performance for the cost, targeted toward medium to long-term demand growth. We aim to increase sales of hydraulic equipment by increasing market share of mainly industrial vehicle, construction equipment, and agricultural equipment applications, actively expanding sales to China, and developing business in Europe and the United States. 2. Financial Conditions Assets at March 31, 2011 Over the course of the fiscal year ended March 31, 2011, total assets increased 3,514 million yen to 156,653 million yen, reflecting increases of 6,088 million yen in cash and time deposits and 1,591 million in merchandise and products, and decrease of 3,382 million yen in merchandise and products, partly offset by declines of 2,976 million yen in trade notes and accounts receivable and 2,976 million yen in work in process. Net assets increased 3,514 million yen to 156,653 million yen due to 7,833 million yen increase in retained earnings. Cash flows Cash and cash equivalents increased 5,979 million yen versus March 31, 2010, to 34,221 million yen at March 31, I. Cash flow from operating activities Net cash provided by operating activities was 24,992 million yen, up 11,236 million year on year, primarily due to a positive contribution to cash flow of 6,534 million yen, representing the net effect of an increase/decrease in trade payables, and 4,945 million yen increase in income before income taxes and minority interests. II. Cash flow from investing activities Net cash used in investing activities was 8,281 million yen, up 605 million yen year on year primarily due to capital expenditures of 8,341 million yen. III. Cash flow from financing activities Net cash used in financing activities was 9,044 million, up 7,289 million yen year on year primarily due to 5,639 million from repayment of loans, 2,206 million yen from dividend payments, and 868 million yen from payments of finance lease obligations. 3. Dividend Policy and Dividends for the Fiscal Years Ended March 31, 2011 and 2012 Shimadzu views the return of profits to shareholders as a key management objective. We aim to 4

5 maintain a stable dividend while taking ongoing earnings performance into account. With this goal in mind, we will continue our efforts to boost earnings and hence return on equity by further improving our profit-generating capacity and financial health while also maintaining sufficient internal reserves to fund capital expenditures and R&D to provide a platform for future growth. We paid a year-end dividend of 3.50 per share for the fiscal year ended March 31, 2010, but for the fiscal year ended March 31, 2011, we intend to pay a year-end dividend of 4 per share. Combined with the interim dividend of 4 per share, this takes the total annual dividend to 8 per share, which is 1 per share higher than the previous fiscal year. For the fiscal year ended March 31, 2012, we currently plan to pay an interim dividend of 4 per share and a year-end dividend of 4 per share for a total annual dividned of 8 per share. 5

6 4. Consolidated Financial Statements (1) Consolidated Balance Sheets As of March 31, 2011 As of March 31, 2010 Assets Current assets Cash and time deposits 35,455 29,367 Trade notes and accounts receivable 79,669 83,051 Merchandise and products 31,032 29,441 Work in process 16,573 19,549 Raw materials and supplies 15,076 14,024 Deferred tax assets 7,335 6,138 Other 3,749 3,309 Allowance for doubtful receivables (982) (1,103) Total current assets 187, ,778 Noncurrent assets Property, plant and equipment: Buildings and structures 70,926 68,135 Accumulated depreciation (35,346) (34,331) Buildings and structures, net 35,579 33,803 Machinery, equipment and vehicles 17,784 19,880 Accumulated depreciation (14,103) (14,723) Machinery, equipment and vehicles, net 3,680 5,157 Land 18,749 18,824 Leased assets 3,389 4,322 Accumulated depreciation (1,847) (2,662) Leased assets, net 1,541 1,659 Construction in progress 15 1,881 Other 26,600 26,620 Accumulated depreciation (20,522) (20,332) Other, net 6,078 6,287 Net property, plant and equipment 65,644 67,614 Intangible fixed assets 6,794 6,266 Investments and other assets: Investment securities 9,489 9,975 Long-term receivables 876 1,307 Deferred tax assets 9,738 10,531 Other 4,571 4,904 Allowance for doubtful receivables (180) (275) Total investments and other assets 24,494 26,444 Total noncurrent assets 96, ,325 Total assets 284, ,104 6

7 As of March 31, 2011 As of March 31, 2010 Liabilities Current liabilities Trade notes and accounts payable 48,278 44,820 Short-term loans 9,754 14,650 Lease obligations Accounts payable, other 8,541 9,296 Income taxes payable 2,990 1,405 Allowance for employees bonuses 5,884 5,451 Allowance for director s bonuses Other 8,453 8,796 Total current liabilities 84,733 85,397 Long-term liabilities Unsecured bonds 10,000 10,000 Long-term debt 10,974 12,196 Lease obligations 1, Liability for employees retirement benefits 15,155 15,806 Liability for directors retirement benefits Other 6,006 6,292 Total long-term liabilities 43,456 45,567 Total liabilities 128, ,964 Net assets Shareholders capital Common stock 26,648 26,648 Additional paid-in capital 35,188 35,188 Retained earnings 105,244 97,411 Treasury stock (680) (646) Total shareholders capital 166, ,601 Valuation and translation adjustments Net unrealized securities gain on available-for-sale 2,334 2,829 Foreign currency translation adjustments (12,305) (8,507) Total valuation and translation adjustments (9,970) (5,678) Minority interests Total net assets 156, ,139 Total liabilities and net assets 284, ,104 7

8 (2) Consolidated Statements of Operations Year ended March 31, 2011 Year ended March 31, 2010 Net sales 252, ,255 Cost of sales 157, ,204 Gross profit 95,520 87,050 Selling, general and administrative expenses 79,222 76,756 Operating income 16,297 10,294 Other income: Interest income Dividend income Insurance payments received Rent received Other 1, Total other income 1,992 1,636 Other expenses: Interest expense Foreign exchange loss, net Other 1,678 1,228 Total other expenses 3,011 2,115 Ordinary income 15,279 9,816 Extraordinary income: Gain on sale of property, plant and equipment Gain on sale of investment securities 60 Total extraordinary income Extraordinary losses: Loss on disposal of property, plant and equipment Effect of adoption of new accounting standards for asset retirement obligations Loss on write-down of investment securities Loss on disposal of investment securities 40 Total extraordinary losses Income before income taxes and minority interests 14,533 9,588 Income taxes 4,624 3,128 Refund of income taxes for past fiscal years (389) Income taxes adjustments (160) 705 Total income taxes and income taxes adjustments 4,464 3,444 Income before minority interests 10,069 Minority interests in net income Net income (loss) 10,046 6,130 8

9 (3) Consolidated Statements of Cash Flows Year ended March 31, 2011 Year ended March 31, 2010 I. Cash flows from operating activities: Income before income taxes and minority interests 1,4533 9,588 Depreciation and amortization 7,924 8,301 Effect of adoption of new accounting standards for asset retirement obligations 258 Increase (decrease) in allowance for doubtful receivables (140) 165 Increase (decrease) in allowance for employees bonuses Increase (decrease) in allowance for director s bonuses 11 (126) Provision for (reversal of) accrued retirement benefits for employees (583) (1,059) Interest and dividends income (282) (216) Interest expense Foreign exchange (gain) loss, net Net (gain) loss on sale and valuation of investment securities 92 (6) Net (gain) loss on sale and disposal of property, plant and equipment (Increase) decrease in trade receivables 1,167 (3,138) (Increase) decrease in inventories (2,048) 6,493 Increase (decrease) in trade payables 5,075 (1,459) Other, net 364 (1,704) Subtotal 27,693 17,964 Interest and dividends received Interest paid (370) (577) Income taxes paid (2,612) (3,847) Net cash provided by (used in) operating activities 24,992 13,756 II. Cash flows from investing activities: Purchase of property, plant and equipment (8,341) (7,281) Proceeds from sale of property, plant and equipment Purchase of investment securities (438) (206) Proceeds from sale of investment securities 76 Proceeds from investment subsidiary (193) Increase in long term receivables (39) (19) Decrease in long term receivables Other, net (425) (332) Net cash provided by (used in) investing activities (8,281) (7,675) III. Cash flows from financing activities: Borrowing of short-term loans 453 4,867 Repayment of short-term loans (5,879) (2,472) Borrowing of long-term debt ,787 Repayment of long-term debt (642) (1,089) Issuance of commercial paper 11,000 11,000 Repayment of commercial paper (11,000) (11,000) Redemption of unsecured bonds (10,000) Cash dividends paid (2,206) (2,361) Dividends payments to minority shareholders (9) (11) Repayment of financial lease (333) (333) Payment of finance lease obligations (868) (1,120) Other, net 11 (22) Net cash provided by (used in) financing activities (9,044) 1,754 IV. Foreign currency translation adjustments on cash and cash equivalents (1,687) 243 V. Net increase (decrease) in cash and cash equivalents 5,979 4,569 VI. Cash and cash equivalents, beginning of period 28,242 23,673 VII. Cash and cash equivalents, end of period 34,221 28,242 9

10 (4) Notes on the Going-concern Assumption Not applicable (5) Segment Information Additional information Effective the first quarter of the fiscal year ending March 31, 2011, the Company adopted the Revised Accounting Standard for Disclosures about Segments of an Enterprise and Related Information (ASBJ Statement No. 17, revised March 27, 2009) and its accompanying Guidance on the Accounting Standard for Disclosures about Segments of an Enterprise and Related information (Guidance No. 20, March 21, 2008). In accord with the newly adopted standard, the former Aircraft Equipment & Industrial Machinery segment was separated to two segments and presented as Aircraft Equipment and Industrial Machinery. Unallocated operating expenses (expenses for the Company s fundamental research and development, advertisement expenses, and administration) that were previously included in "Eliminations/corporate" were allocated among the four segments, namely Analytical & Measuring Instruments, Medical Systems, Aircraft Equipment, and Industrial Machinery. 1) Sales and income (loss) by reportable segment Fiscal year ended March 31, 2011 (April 1, 2010 March 31, 2011) Analytical & Measuring Instrument s Reportable segment Amounts reported on the quarterly statements of operations Medical Aircraft Industrial Systems Equipment Machinery Total Other Total Adjustments I. Sales (1) Sales to customers 140,755 49,551 24,994 29, ,472 8, , ,707 (2)Inter-segment (1291) ,068 1,291 sales Total 140,850 49,552 25,071 29, ,695 9, ,998 (1291) 252,707 Segment income (loss) 14,186 (83) (569) ,532 1,759 16, ,297 Operating income (loss) under the previous segmentation Fiscal year ended March 31, 2011 (April 1, 2010 March 31, 2011) Aircraft Analytical & Measuring Instruments Medical Systems Equipment & Industrial Machinery Other Total Eliminations / corporate Consolidated total Operating income (loss) 21,135 1,476 2,678 1,759 27,049 (10,752) 16,297 10

11 For reference: Segment information for the twelve months ended March 31, 2010, under the new segmentation Fiscal year ended March 31, 2010 (April 1, 2009 March 31, 2010) Analytical & Measuring Instrument s Reportable segment Amounts reported on the quarterly statements of income Medical Aircraft Industrial Systems Equipment Machinery Total Other Total Adjustments I. Sales (1) Sales to customers 134,407 50,483 26,949 20, ,686 5, , ,255 (2)Inter-segment (1,235) ,235 sales Total 134,629 50,489 27,024 20, ,072 6, ,490 (1,235) 238,255 Segment income (loss) 10, (1,840) 8,827 1,451 10, ,294 Operating income (loss) under the previous segmentation Fiscal year ended March 31, 2010 (April 1, 2009 March 31, 2010) Aircraft Analytical & Measuring Instruments Medical Systems Equipment & Industrial Machinery Other Total Eliminations / corporate Consolidated total Operating income (loss) 17,022 1, ,451 20,074 (9,779) 10,294 2) Relevant information Sales by geographic segment Fiscal year ended March 31, 2011 (April 1, 2010 March 31, 2011) The Other Asian Japan Americas Europe China countries Other Total 152,331 22,648 18,475 32,043 18,924 8, ,707 For reference: Geographic segment information for the twelve months ended March 31, 2010, under the new segmentation Fiscal year ended March 31, 2010 (April 1, 2009 March 31, 2010) Japan The Americas Europe China Other Asian countries Other Total 146,800 21,589 17,423 27,558 16,017 8, ,255 (6) Notes on Significant Changes in Shareholders Capital Not applicable 11