Oki 2009 Annual Report Download - page 28

26 Annual Report 2009
is forecasted to increase ¥13.6 billion to ¥14.0 billion, owing to efforts
to absorb the impact of lower marginal profit due to reduced sales and
the strong yen by applying thorough control over procurement and
production costs as well as other fixed costs. OKI is expected to garner
¥47.0 billion profit and thus return to the black by ¥2.0 billion, thanks
to increased operating income and a decline in extraordinary loss com-
pared with the previous fiscal year.
For this results forecast for the fiscal year ending March 31, 2010,
calculations were based on the assumption of foreign exchanges rates
of ¥95 per US dollar and ¥120 per euro.
Performance Forecasts for the Fiscal Year Ending March 31, 2010
(Billions of yen unless otherwise stated)
Net Sales Operating
Income Net Income Net Income per
Share (Yen)
¥460.0 ¥14.0 ¥2.0 ¥2.93
BUSINESS AND OTHER RISKS
The forecasts and projected operating results contained in this report
are based on information available and assumptions deemed rational
at the time of preparation, and thus entail inherent uncertainties.
Accordingly, investors are cautioned that actual results may differ
materially from those projected as a result of a variety of factors. The
following items are business and other risks that the OKI Group consid-
ers may significantly influence investors’ judgments. The following are
also major factors that could possibly affect the Group’s actual perfor-
mance. It should be noted, however, that factors that may affect the
Group’s performance are not limited to these items. The OKI Group is
aware of the potential impact these risks may have if any were to occur
and is implementing measures to avoid such occurrence, as well as to
minimize the weight of their impact should they occur.
(1) Political and Economic Trends
Demand for the OKI Group’s products is subject to political and eco-
nomic trends in the individual countries and regions in which they
are sold. Accordingly, economic recession, the resulting contraction
in demand in the OKI Group’s principal operating markets of Japan,
North America, Europe and Asia and changes in the import-export
policy for foreign products may impact its business performance and
financial position.
(2) Sudden Technological Innovation
The OKI Group’s principal business segments, comprising Info-Telecom
Systems and Printers, are subject to rapid technological innovation.
Accordingly, the OKI Group strives to preserve its competitive advan-
tage through new technology and product research and development.
In the event, however, that the OKI Group is unable to keep pace with
new innovations in technology and products, is burdened with obsolete
products, and is unable to deliver products and services that appeal to
customers, its performance and financial position may be affected.
(3) Market Trends
1. The product and geographical markets in which the OKI Group
operates are subject to frequent entry by new participants and per-
sistent competition. In an effort to secure competitive advantage,
the OKI Group strives to enhance product development and reduce
costs. In the event the OKI Group is unable to implement effective
product development and cost rationalization measures and fails to
maintain and secure sufficient market share, business performance
and financial position may be affected.
2. The performance of Info-Telecom Systems segment is subject to
a variety of factors including: (1) changes in investment trends by
financial institutions due to revisions of financial regulation, poor
performance and other factors; (2) changes in investment trends by
telecommunication carriers owing to amendments to telecommuni-
cation regulations, shifts in business strategy and other factors, and;
(3) a significant decline in public-sector investment due to national
and local government policies.
3. The printer market is experiencing intense price competition, par-
ticularly in color printers. In an effort to secure a strong market
position and profitability, the OKI Group is endeavoring to develop
new products and reduce costs. Despite these efforts, continued
downward revisions to product prices may impact the Printers seg-
ment’s performance.
(4) Raw Materials and Component Procurement
The OKI Group procures a variety of raw materials and components
in support of its manufacturing activities. The ability to ensure timely
product shipment, avoid delays in product delivery and minimize
opportunity loss is dependent upon the stable supply of raw materials,
components, specialized parts and alternative components. The OKI
Group’s performance and financial position may therefore be affected
in the event stable supply cannot be maintained.
The OKI Group is reliant upon the direct and indirect supply of
crude oil and materials, such as metals, as a part of its manufacturing
activities. A sharp rise in the price of these and other key materials may
impact the OKI Group’s performance and financial position.
(5) Product Defects and Delays in Delivery
Despite every effort to maintain quality assurance, the OKI Group is
unable to eliminate all possibility of product and service defects. In
the event of a product or service defect, the OKI Group may be liable
for damages. In addition, any incidence of defect may impact the OKI
Group’s reputation and standing and contribute to a drop in demand.
In either case, the OKI Group’s performance and financial position may
be affected.
While the OKI Group adopts complete and thorough measures to
ensure the timely delivery of its products and services, unforeseen inci-
dents in design, material procurement and production control may lead
to a delay in shipment. In this case, the OKI Group may become liable
for the payment of damages.
(6) Success or Failure of Strategic Alliances
The OKI Group is aggressively engaged with other companies in stra-
tegic alliances in research and development, manufacturing, sales and
other activities. While the OKI Group only enters into and maintains
such alliances with the utmost caution, there may in theory be instances
where the OKI Group is not able to obtain the desired cooperation from
the strategic partner in business strategy, production and technical
development, fund procurement or other activity, or where the alliance
does not yield satisfactory results. The OKI Group’s performance and
financial condition may be adversely affected by such an event.
(7) Overseas Business Activities
The OKI Group is engaged in business activities across a variety of
countries and regions. Accordingly, it is subject to a number of risks
specific to overseas business activities, including country risk and for-
eign currency fluctuation risk. In the implementation of its business,
the OKI Group takes all necessary care to avoid and minimize risks.
In particular, the OKI Group enters into forward currency and cur-
rency swap contracts to minimize the risk of short-term movements in
foreign currencies. Notwithstanding the aforementioned, abrupt fluc-