Oki 2009 Annual Report Download - page 11

Annual Report 2009 9
Utilizing another of OKI’s basic strategies—Shift to a More Efficient Management Style—a busi-
ness structure has been established through spinning-off the areas related to next-generation
network(NGN) operations in the telecom business to heighten management flexibility and enable
agile and timely responses to environmental changes. In addition to undertaking these organiza-
tional streamlining and restructuring measures, OKI also made efforts to optimize fixed costs.
Owing to the steady implementation of the aforementioned measures, OKI achieved a positive
operating income, amid rapidly deteriorating economic conditions, particularly during the second
half of the fiscal year. The fiscal year under review can be summed up as a year in which OKI
completed the formulation of its fully revamped business foundation.
Performance of the OKI Group during the fiscal year ended March 31, 2009 was as follows: Net
sales decreased ¥174.0 billion to ¥545.7 billion compared to the previous fiscal year, and operat-
ing income achieved a positive ¥400 million despite a year-on-year drop of ¥5.8 billion. Included
within this are factors that have affected the semiconductor segment, such as share transfers of
the business subsidiary and deterioration of the semiconductor market until the second quarter
of the fiscal year under review. As a result, net sales and operating income in this segment fell
¥84.1 billion and ¥8.9 billion, respectively, compared to the previous fiscal year. Factors impact-
ing business segments that exclude semiconductors include demand for privatization of Japan’s
postal services coming full circle, the appreciation of the yen and deteriorating economic condi-
tions. Consequently, net sales fell ¥89.9 billion year-on-year. However, factors that have reduced
earnings include a decrease in marginal profits following declining sales and falling consumer
prices. However, OKI was able to offset these declines by improving profitability from withdrawal
of low-profit businesses, reducing production and procurement costs, and optimizing fixed costs.
As a result, operating income increased by ¥3.2 billion. Due to the recording of extraordinary
losses that include implementing structural reform measures and changes in the inventory valu-
ation system, net income declined ¥45.6 billion year-on-year, reporting a loss of ¥45.0 billion.
Consequently, it is with sincere regret that the fiscal year ended March 31, 2009 year-end
dividend payments must be suspended due to an inability to ensure the necessary funds as a
result of a significant net loss.
Targets for the Fiscal Year Ending March 31, 2010
In view of the prospects for the fiscal year ending March 31, 2010, we are forced to concede
that the severe conditions that began in the second half of the previous fiscal year are likely to
continue, despite rays of light beginning to appear in one portion of the economic environment
that has been forecasted. Consequently, net sales are projected to total ¥460.0 billion, which is
the lower limit envisaged under the current circumstances, despite OKI’s efforts to maximize
sales. In terms of projected earnings, OKI will accelerate measures to bolster earnings potential
in each segment in order to reach an operating income of ¥14.0 billion, which was disclosed in
October 2008 on the premise of the aforementioned net sales figure. More specifically, OKI will
thoroughly optimize fixed costs to respond to rapid changes in the operating environment, in
addition to steadily implementing measures following its basic strategies to revamp business struc-
ture. As a result of this, we are projecting net income to reach the positive figure of ¥2.0 billion.
OKI will make ongoing efforts to strengthen the earnings potential of the Group in order to over-
come the severe operating environment, which continues to change drastically. As the Company
works toward achieving these goals, OKI asks for your continued support and understanding.
July 2009
Hideichi Kawasaki
President
Oki Electric Industry Co., Ltd.