Pentax 2006 Annual Report Download - page 5

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I am delighted to have the opportunity to report on
Hoya’s consolidated results for the fiscal year ended
March 31, 2006, and to give an overview of our
future business direction.
The Surprising Scope of Hoya’s Business
The number of Hoya shareholders jumped from just 7,000 a
year ago to more than 50,000 at the end of March 2006.
Institutional investors continue to hold the greater proportion of
shares, but I am also extremely pleased that a large number of
individuals became Hoya shareholders during the fiscal year
under review.
Many readers probably have an image of Hoya as a company
in the eyeglass lens and contact lens business. In fact, the
Company has core strengths in two business areas: Information
Technology and Eye Care. Eyeglass lenses and contact lenses are
the main products of the Eye Care side of our business, and I
believe that consumers in general are quite familiar with the
Hoya name when it comes to these. In the Information
Technology business, however, some might be surprised to hear
about our dominant share in the markets for the mask blanks
and photomasks that are so essential to the production of
semiconductor chips and LCD panels, the glass disks used in the
HDDs found in notebook computers, and the optical glass lenses
seen in digital cameras and camera-equipped mobile phones. All
of these are home electrical products influenced by advances in
digital technologies, and although Hoya’s brand name does not
appear on these consumer products, we contribute significantly
to the improved functionality of the products that people
everywhere use. Our products greatly enhance the convenience
to consumers. Hoya has been admired by institutional investors
for some time, but from here forward I hope that individual
shareholders will also feel an affinity for Hoya as an especially
approachable company.
Review of Fiscal 2006 Results
Let me provide a brief review of Hoya’s consolidated results for
fiscal 2006. Net sales rose 11.7% on the previous year to reach
¥344,228 million. Operating income was up 19.0% year on year
to ¥101,096 million, and ordinary income grew 15.8% to
¥103,638 million. Net income increased 17.9% to ¥75,620
million. In the Information Technology field, both sales and income
saw double-digit growth as we stepped up production capacity in
response to strong demand. In fact, demand grew more quickly
than expected, so we lost some opportunities due to inadequate
supply. In the Eye Care field, both eyeglass lenses and contact
lenses achieved steady growth in sales and income. Clearly, the
industrial structures of the Information Technology and Eye Care
fields differ greatly. Yet I believe that this year’s results clearly
demonstrate the effectiveness of Hoya’s overall group strategy,
which is to maximize income by leveraging our intrinsic strengths
in both fields.
<Information Technology>
The Electro-Optics division saw net sales grow by 15.0% over
the previous year, and operating income rose 18.3%. Like last
year, both the growth in demand for digital consumer electronics
products and the increasing demand for highly functional
products contributed to these favorable results.
Hoya’s mask blanks, which are used in the production of
semiconductors, enjoy the major share of the market, and sales
to semiconductor manufacturers around the globe continued to
post steady results. Over the past several years, sales of high-end
products have been expanding. The trend toward more minutely
detailed integrated circuit (IC) chips continues, and the need for
high-resolution, high-precision mask blanks keeps on growing.
Demand for photomasks employed in semiconductor production
is following a similar trend.
In South Korea, we built a new plant for production of the
photomasks used in the manufacture of LCD panels. With this
step, we have completed our three-facility production system,
with the other bases being in Japan and Taiwan. Because each of
Hoya’s production facilities is located close to the panel makers’
own plants, we can ensure that our products accurately meet
our clients’ detailed requirements. We are positioned to develop
our business with great responsiveness to market needs. Another
positive for the Company is that the growing size of LCD panels
is driving increased demand for larger and more precise
photomasks—an area where we already have the edge.
Income from the sale of glass disks for HDDs saw a major
increase in the fiscal year under review, with demand driven by
the many consumers replacing their desktop computers with
notebooks as the latter have become widely used. During the
year, Hoya responded to this strong demand by opening a new
plant in Vietnam, in addition to expanding capacity at existing
plants. In the field of optical lenses, results were enhanced by the