Fourth Quarter Financial Results Fiscal Year 2016 (Ended March 2017)

Transcription

1 Fourth Quarter Financial Results Fiscal Year 2016 (Ended March 2017) April 28, 2017 SEIKO EPSON CORPORATION All rights reserved.

2 Disclaimer regarding forward-looking statements The foregoing statements regarding future results reflect the Companyʼs expectations based on information available at the time of announcement. The information contains certain forward-looking statements that are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks and uncertainties include, but are not limited to, the competitive environment, market trends, general economic conditions, technological changes, exchange rate fluctuations and our ability to continue to timely introduce new products and services. Note regarding business profit Business profit is calculated by deducting cost of sales and SGA expenses from revenue. Although not defined in the statement of consolidated comprehensive income, this indicator is very similar to the concept of operating income under J-GAAP. Epson will present this information as a reference, as the Company believes users of financial statements will find it useful when evaluating Epson's financial performance. Numerical values presented herein Numbers are rounded down to the unit indicated. Percentages are rounded off to one decimal place. 1

3 FY2016 Full-Year Financial Results FY2017 Financial Outlook Mid-Range Business Plan Progress FY2016 Q4 Financial Results FY2017 Financial Forecast Shareholder Return 2

4 FY2016 Full-Year Financial Results FY2017 Financial Outlook Mid-Range Business Plan Progress FY2016 Q4 Financial Results FY2017 Financial Forecast Shareholder Return 3

5 Financial Highlights (Full Year) FY2015 1/31 Outlook FY2016 Y/Y Revenue 1, ,02-1, Business profit Profit from Profit before taxes Profit for the year EPS* Exchange rate USD EUR operating activities * Basic earnings per share for the year Change (amount, ) Vs. 1/31Outlook Exchange difference Revenue Business profit USD EUR Other Total

6 FY2016 Results by Business Segment 1,20 1, FY2015 Revenue FY2016 FY2016 Previous Outlook Consolidated total Business profit 1, ,02 1,024.8 Y/Y Vs. previous Other Wearable & Industrial Products Y/Y Vs. previous Visual Communications Y/Y -4.3 Vs. previous +5.6 Printing Solutions Y/Y Vs. previous Corporate, adjustment Y/Y -1.7 Vs. previous +0.4 FY2015 FY2016 FY2016 Previous Outlook Consolidated total Y/Y Vs. previous +1.8 Wearable & Industrial Products Y/Y -2.0 Vs. previous +1.8 Visual Communications Y/Y +0.5 Vs. previous +1.1 Printing Solutions Y/Y Vs. previous -2.8 Other Corporate, adjustment Y/Y +2.8 Vs. previous

7 Revenue Comparison by Business Printing Solutions PC, Other Y/Y +0.3 Vs. Previous Professional Printing Y/Y Vs. Previous +0.6 Large format inkjet printer for photos and graphics 40 Printers Y/Y Vs. Previous -1.7 sales FY2015 FY2016 IJP SIDM 10 9 Others FY2015 FY2016 FY2016 Previous Outlook Eliminations IJP: Inkjet Printers SIDM: Serial Impact Dot Matrix Printers High-capacity ink tank printer 6

8 Revenue Comparison by Business Visual Communications Wearable & Industrial Products Microdevices, Other Y/Y -5.2 Vs. Previous Visual Communications Y/Y -4.3 Vs. Previous Robotics Solutions Y/Y +1.5 Vs. Previous +0.9 Wearable Products Y/Y -9.9 Vs. Previous Eliminations FY2015 FY2016 FY2016 Previous Outlook FY2015 FY2016 FY2016 Previous Outlook 7

9 FY2017 Financial Outlook FY2016 FY2017 Change Outlook Amount Revenue 1, , Business profit Profit from operating activities Profit before taxes Profit for the year EPS* Exchange rate USD EUR * Basic earnings per share for the year Exchange sensitivity (Full year, billions Revenue Effect of 1-yen rise in yen value Business profit USD EUR Effect of 1 rise in yen value Other

10 FY2017 Financial Outlook By business segment 1,20 1, Revenue Business profit 1, , FY2016 FY2017 FY2016 FY2017 Outlook Outlook Consolidated total Revenue +5.1 Business profit +1.1 Wearable & Industrial Products Revenue +4.4 Business profit +4.1 Visual Communications Revenue +2.3 Business profit +1.8 Printing Solutions Revenue +2.3 Business profit +5.8 Other Corporate, Adjustment Revenue -3.4 Business profit

11 FY2017 Revenue Outlook by Business Printing Solutions PC, Other 80 Y/Y Professional Printing Y/Y -2.6 Large format inkjet printer for signage 40 Printers 30 Y/Y sales FY2016 FY2017 IJP SIDM 9 8 Others 10 9 Eliminations FY2016 FY2017 Outlook High-speed linehead inkjet MFP *Shown with options 10

12 FY2017 Revenue Outlook by Business Visual Communications Wearable & Industrial Products Microdevices, Other Y/Y Visual Communications Y/Y Robotics Solutions Y/Y Wearable Products Y/Y Eliminations FY2016 FY2017 FY2016 FY2017 Outlook Outlook 11

13 Business Plan Progress: Overview We are steadily advancing in line with the Epson 25 Mid-Range Business Plan (FY ). FY2016 accomplishments (first year of the plan) Expanded sales of strategic products Further developed new market segments Further developed strategic products that will drive future growth Strengthened business infrastructure PaperLab office papermaking system FY2017: Advance strategies and lay the foundation for growth to achieve our vision 12

14 Business Plan Progress: Business Profit Earnings are steadily rising in line with strategic advances 12 Business profit ROS 年度 FY 年度 2017 年度 FY 年度 FY 年度 / / / / /125 * Recalculated Outlook * Recalculated Mid-range business plan USD EUR * Recalculated: Business profit & ROS recalculated based on assumed rates used for the mid-range business plan 13

15 Strategies in Each Business FY2016 FY2017 Printers High-capacity ink tank printers Sales steadily expanded Market stimulation Continue expanding by launching new products Maintain steady ink revenue by capturing high print volume users High-speed linehead inkjet MFPs Completed development Secure steady worldwide sales - Improve the sales organization - Increase awareness in the office PaperLab office papermaking system Began sales Build an organization to meet demand 20 (Million units) Inkjet Printer Unit Shipments & Ink Revenue (Billion yen) FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY High-capacity ink tank models (including high-capacity ink pack printers & highspeed linehead inkjet MFPs) Ink cartridge printers for the home Ink cartridge printers for the office -Ink revenue (right axis: recalculated revenue by currency using FY2016 rates) 14

16 Strategies in Each Business Professional printing Visual communications FY2016 Expanded sales in new market segments (signage, textiles, labels) Made Robustelli a wholly-owned subsidiary. Set up a textile printing R&D center. Launched high-brightness laser projectors Further expanded market share by highlighting the appeal of 3LCD FY2017 Leverage inkjet strengths to expand sales in new market segments by launching products that support the digitalization of commercial and industrial printing Build strength in high-brightness & ultra short /short-throw projectors. Expand sales by taking advantage of an extensive lineup and 3LCD technology Monna Lisa digital inkjet textile printer 25,000 lumen 3LCD laser projector 15

17 Strategies in Each Business FY2016 FY2017 Wearable products Robotics solutions Microdevices, other Improved business infrastructure Reorganized the functions of Orient Watch Expanded sales by launching distinctive robots, force sensors, etc. Combine watch technology and advanced technology to create differentiated products Improve ability to recommend solutions and enhance the lineup to capture opportunities for steady growth Tie stable demand to sales and continue to develop core devices & technologies for the finished product businesses Runsense GPS sports monitor N series of compact 6-axis robots Compact atomic oscillator 16

18 Strengthening Business Infrastructure for Expansion in New Areas R&D FY2016 High-speed linehead inkjet MFPs, PaperLab, high-brightness laser projectors, etc. FY2017 Develop core technologies and new products to realize the vision. Production organization Sales organization Build & start up production at new factories to support growth. Streamline and automate existing factories. Began operations at new factories in Indonesia and Akita. Began construction on a new printhead factory in Hirooka. Begin operations at a new factory in the Philippines. Continue to build up the office sales & technical support organizations. Increase recognition in new areas. New Indonesia Epson factory New Akita Epson factory (Japan) New factory planned at Hirooka Office (Japan) (Operations scheduled for FY2018) 17

19 FY2016 Full-Year Financial Results FY2017 Financial Outlook Mid-Range Business Plan Progress FY2016 Q4 Financial Results FY2017 Financial Forecast Shareholder Return 18

20 Financial Highlights (Fourth Quarter) FY2015 FY2016 Change Q4 Q4 Amount Revenue Business profit Profit from operating activities Profit before taxes Profit for the period EPS* Exchange rate USD EUR * Basic earnings per share for the period Exchange difference Revenue Business profit USD EUR Other Total

21 Quarterly Revenue Trend By business segment /Q1 2015/Q2 2015/Q3 2015/Q4 2016/Q1 2016/Q2 2016/Q3 2016/Q4 Consolidated total Y/Y +3.9 Other Wearable & Industrial Products Y/Y +2.1 Visual Communications Y/Y +3.2 Printing Solutions Y/Y +0.8 Corporate, Adjustment Y/Y

22 Quarterly Revenue Comparison Printing Solutions Segment PC, Other Y/Y +0.1 Professional Printing Y/Y +1.1 Printers Y/Y -0.4 sales 2015/Q4 2016/Q4 IJP SIDM 9 8 Others Large format printers: Continued expansion in signage, textile, & label printing Revenue hurt by forex IJP: Ink cartridge printer sales declined. Sales of high-capacity ink tank printers continued to expand. Ink sales fell compared to last year, when demand temporarily spiked in Japan. SIDM: ASPs in China decreased. Revenue hurt by forex 2015/Q4 2016/Q4 Eliminations 21

23 Quarterly Revenue Comparison Visual Communications Segment Visual Communications Y/Y +3.2 Projectors: Sales increased mainly in Asia. High-brightness segment showed large growth. Revenue hurt by forex /Q4 2016/Q4 22

24 Quarterly Revenue Comparison Wearable Products & Industrial Products Segment Microdevices, Other Microdevices: Quartz sales solid. Semiconductor demand increased mainly in foundry business Y/Y +1.7 Robotics Solutions Y/Y +2.0 Robots: Global demand steadily expanded. IC handlers: Sales increased in China & North America Wearable Products Y/Y -2.1 Watches: Ongoing subdued demand 2015/Q4 2016/Q4 Eliminations 23

25 Quarterly Selling, General and Administrative Expenses ( revenue) Consolidated total Y/Y +0.8 Other Y/Y Advertising Y/Y Sales Promotions Y/Y -0.1 Research & Development Y/Y /Q1 2015/Q2 2015/Q3 2015/Q4 2016/Q1 2016/Q2 2016/Q3 2016/Q4 Salaries & Wages Y/Y

26 Quarterly Business Profit Trend By business segment Consolidated total Y/Y -0.4 Wearable & Industrial Products Y/Y +3.2 Visual Communications Y/Y +1.8 Printing Solutions Y/Y -5.1 Other Corporate, Adjustment 2015/Q1 2015/Q2 2015/Q3 2015/Q4 2016/Q1 2016/Q2 2016/Q3 2016/Q4 Y/Y

27 Q4 Business Profit Change Cause Analysis +4.4 Cost changes Sales volume changes Price changes -6.7 SGA increase -2.0 Other* -0.4 Impact of exchange rates Business profit Business profit 0.4 billion decrease 2015/Q4 2016/Q4 * The corporate and other segments in this comparison include products and businesses that cannot be compared directly with similar items in the previous year. 26

28 Statements of Financial Position Total assets 1, , End of March 2013 End of March 2014 End of March 2015 End of March 2016 End of March 2017 J-GAAP IFRS IFRS IFRS IFRS Inventories End of March 2013 End of March 2014 End of March 2015 End of March 2016 End of March 2017 J-GAAP IFRS IFRS IFRS IFRS 27

29 Statements of Financial Position Interest-bearing liabilities and ratio of interest-bearing liabilities End of March 2013 End of March 2014 End of March 2015 End of March 2016 End of March 2017 J-GAAP IFRS IFRS IFRS IFRS Equity and equity ratio attributable to owners of the parent company (Shareholder's equity and equity ratio) End of March 2013 End of March 2014 End of March 2015 End of March 2016 End of March 2017 J-GAAP IFRS IFRS IFRS IFRS 28

30 Outlook for R&D Costs, Capital Expenditure and Depreciation and Amortization Expenses Research & Development FY2013 FY2014 FY2015 FY2016 FY2017 Outlook Capital expenditures Depreciation and amortization Capex breakdown by segment FY FY2017 Outlook Printing Solutions Visual Communications Wearable & Industrial Products Other, Corporate FY2013 FY2014 FY2015 FY2016 FY2017 Outlook 29

31 Free Cash Flows Outlook Cash flows from operating activities Cash flows from investing activities Free cash flows FY2013 FY2014 FY2015 FY2016 FY2017 Outlook 30

32 Main Management Indicators () ROA: ROS: ROE: Business profit/ total assets (avg. balance) Business profit/ revenue Profit for the period attributable to owners of the parent company/ Equity attributable to owners of the parent company (avg. balance) FY2013 FY2014 FY2015 FY2016 FY2017 Outlook 31

33 Shareholder Returns While the top priority is strategic investment in growth, Epson also actively returns profits in parallel with its efforts to build a robust financial structure that is capable of withstanding changes in the business environment. Epson has set a consolidated dividend payout ratio *1 in the range of 40 as a mediumterm target. We intend to be more active in giving back to shareholders by agilely repurchasing shares as warranted by share price, the capital situation, and other factors. Dividends Dividend per share (Yen) *2 Year-end Interim FY2013 FY2014 FY2015 FY2016 FY2017 Outlook Outlook *1: The ratio is based on profit after an amount equivalent to the statutory effective tax rate is deducted from business profit, a profit category that shows profit from the Company's main operations (and which is very similar to the concept of operating income under J-GAAP both conceptually and numerically). *2:Epson declared a 2-for-1 stock split, effective April 1, The graph height shows the level after the split. 32

34 Reference 33

35 Major Business Indicators Printing Solutions Visual Communications FY2016 FY2017 Outlook FY2018 Target Revenue Business profit Revenue Business profit Category Operating CF FY2016 FY2017 Outlook FCF year cumulative (FY business plan) Approx. 33 Approx. 12 Wearable & Industrial Products Other Revenue Business profit Revenue Capital expenditure R&D costs Approx. 21 Invest aggressively Business profit Exchange rate Corporate, Adjustment Revenue Business profit Consolidated total Revenue 1, ,03 1,20 Business profit FY2016 FY2017 Outlook FY business plan USD EUR ROS ROE Sustain at at least 10 34

36 Main Product Sales Trends Results & outlook vs. previous fiscal year Product FY2015 Full year () FY2016 Q1 () FY2016 Q2 () ASP (average selling prices) and sales amounts after conversion to yen FY2016 Q3 () FY2016 Q4 () FY2016 Full year () FY2017 Full year (Outlook) Volume IJP IJP ink Office/ highcapacity ink tank as of total unit sales ASP Revenue Volume (packs) ASP Revenue Approx. 20/ Approx low singledigit + low singledigit Around mid 10 -low singledigit -low singledigit - low teen Flat YoY +low singledigit + high singledigit Approx. 20/ Approx high singledigit -low singledigit Approx. 20/ Approx. 45 +low singledigit + high singledigit mid-singledigit + mid-singledigit -low singledigit - mid-singledigit - high singledigit -low singledigit - mid-teen - mid-singledigit + mid-singledigit -low singledigit -low singledigit - mid-singledigit - - mid-singledigit Volume SIDM printers ASP + low singledigit - mid 20 - mid 20 - mid-teen - high singledigit - high teen - mid-singledigit Revenue -low singledigit Around high teen - high 20 - high singledigit - mid-teen - mid-teen Volume Projectors ASP + low singledigit - mid-teen - mid-teen - high singledigit + mid-singledigit - high singledigit -low singledigit Revenue + mid-singledigit - high singledigit - high singledigit The indicators in this document are based on values tracked internally by Epson. Flat YoY + high singledigit -low singledigit Flat YoY 35

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