Oki 2010 Annual Report Download - page 9

Annual Report 2010 5
Performance in the Fiscal Year Ended March 31, 2010
In the fiscal year under review, the global economy showed signs of slow but steady
recovery, thanks to the benefits of government economic stimulus programs and
improved corporate performances. By contrast, Japan’s economy failed to achieve a full-
fledged recovery, despite signs of improvement in corporate capital investments and
personal consumption.
Under these conditions, the OKI Group took steps to revamp its business structure in
order to create an organization capable of generating stable profits without having to
rely on increased sales. As part of these measures, in October 2008 OKI spun off its
semiconductor company and transferred 95% of that company’s shares to ROHM Co.,
Ltd. This caused a ¥54.1 billion year-on-year decline in consolidated net sales and a
¥5.1 billion improvement in operating income. Excluding the sale of the semiconductor
company, net sales would have decreased ¥47.7 billion, to ¥443.9 billion. Factors for the
sales decline included saturation of demand for ATM replacement in the domestic retail
market and for large projects for bank branch systems, as well as the impact of the
strong yen and a weakening economy. OKI compensated for declines in sales volume
and prices and the yen’s appreciation by reducing procurement costs, production costs,
and fixed costs. As a result, operating income increased by ¥8.4 billion to ¥14.0 billion.
Net income improved by ¥48.6 billion from the previous year to positive ¥3.6 billion,
which was the result of extraordinary losses recorded in the previous year stemming
from the sale of the semiconductor business, as well as an impairment loss due to a
change in the inventory valuation system.
Seeking to maximize corporate value, OKI places high priority on increasing returns to
shareholders while strengthening its financial position and retaining ample internal
reserves. However, year-end dividend payments must be suspended for the fiscal year
ended March 31, 2010, due to an inability to ensure a sufficient level of retained earn-
ings to allow the payment of dividends.
Targets for the Fiscal Year Ending March 31, 2011
In the fiscal year ending March 31, 2011, the economic climate in Japan and overseas is
expected to maintain a recovery tone, driven mainly by emerging nations. However, for-
eign exchange and equity markets are fluctuating dramatically amid instability in
euro-based economies sparked by the fiscal crisis in Greece. There are concerns that the
impact of this will spread to other economies. Under these circumstances, the OKI Group
announced in February 2010 details of its new mid-term business plan, covering the
period from April 2010 to March 2013. In the year ending March 2011, the first year of the
plan, we expect our performance to be negatively impacted by the strong yen and declin-
ing sales to government agencies. Nonetheless, we are confident of offsetting these
factors through increased sales volume of LED printers owing to the launch of new prod-
ucts, as well as growth in the EMS and solutions & services businesses and sales
expansion of ATMs in China. As a result, we forecast consolidated net sales of ¥450.0 bil-
lion, an increase of ¥6.1 billion year-on-year. However, we project a ¥2.0 billion fall in
operating income, to ¥12.0 billion, reflecting the impact of the strong yen, falling sales
prices, and some optimization of our treatment plans. This is despite the positive effects
of ongoing business restructuring, reductions in procurement and production costs.
Although we expect a decline in operating income, we forecast a ¥0.9 billion
increase in net income, to ¥4.5 billion, owing to an improvement in non-operating
income/expenses stemming from a reduction in interest-bearing debt.
OKI will make ongoing efforts to strengthen the profitability of the Group in order to
overcome the severe operating environment, which continues to change drastically. We
look forward to your continued support and understanding.
July 2010
Hideichi Kawasaki
President
Oki Electric Industry Co., Ltd.
600
(Billions of yen)
(Ended March 31)
(Ended March 31)
Net Sales*
500
300
400
200
100
09
0
0807 10 11
491.6
443.9 450.0
15
(Billions of yen)
Operating Income (Loss)*
12
9
3
-3
09
-6
6
0
-9
0807 10 11
(est.)
(est.)
5.6
2.4
(6.2)
14.0
12.0
581.5
573.3
*Excluding the semiconductor business
*Excluding the semiconductor business