Pentax 2006 Annual Report Download - page 6

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size of this business has decreased year by year. During the fiscal
year under review, we attended to streamlining the existing
business to lay the groundwork for our plans to revitalize it.
Future Prospects
Hoya continues to strive to expand the scope of its two key
fields of business: Information Technology and Eye Care. The
Information Technology field currently enjoys the lion’s share of
growth in the Company’s profits and scale of business, but this is
also a field with plenty of risk, because any technological
revolution can suddenly change the competitive environment.
The Eye Care area, the other key field, is less affected by
technological innovation or shifts in economic conditions. The
two fields therefore strike a good balance with one another.
Our theme for the year ahead will be further sharpening
Hoya’s competitive edge. Since the Company’s mask blanks, LCD
photomasks, optical lenses and glass disks all enjoy a high share of
their markets, we spent the last two years prioritizing expansion
of productive capacity to fulfill supply responsibilities. We are
likely to meet our goals for increased production volumes in the
first half of fiscal 2007, so during the second half we plan to
devote more resources to further improving quality.
Management Systems
Within the Hoya Group, headquarters does not issue orders to
each business division relating to each action, and in fact each
division has the authority to conduct its own business.
Prescriptions for the improvements to quality that I referred to
above are prepared by each division. One division may
strengthen its cost-competitiveness, while another might consider
it vital to refine its leading-edge technologies. Also, because the
same division might need to proceed differently depending on
the region, there are circumstances when each region makes its
own independent decisions. For example, it is not unusual for the
Japanese, European and North American regions to undertake
completely different marketing activities for eyeglass lenses within
the Vision Care division.
I believe that the Hoya Group will be strongest if each business
division has its own decision-making authority, and if each division
works hard to create the ideal conditions for its own business. At
the same time, in return for this devolution of authority, each
division has the responsibility to explain its actions. The decision-
making process is unconstrained, but decision makers are held
commencement of full-scale production of lenses for camera-
equipped mobile phones, in addition to existing production of
lenses for digital cameras.
The Photonics division recorded a contraction in net sales of
6.1% in comparison with the previous year. This is a business
characterized by severe competition and challenges in product
differentiation. However, due to efforts to improve the earnings
structure in this business, we achieved a small increase of 4.6% in
operating income.
<Eye Care>
Net sales in the Vision Care division grew 10.0% compared to
the previous year, and operating income rose 19.3%. In Japan,
sales did not grow as quickly as we had hoped, as a result of the
slowdown in the eyeglass market. Demand recovered in Europe,
which is a large market for Hoya, and results for North America,
Asia-Pacific region also improved, yielding these strong
overall results.
In the Health Care division, net sales were 13.0% higher than
the previous year. This growth was driven by healthy sales in
Hoya’s directly managed contact lens specialty retail store chain,
Eye City, where we have been aggressively opening new stores. I
credit these good results to Eye City’s customer-specific consulting
approach to sales, and the excellent after-sales service offered. We
achieved growth despite the fact that price competition has
become entrenched in the Japanese domestic market. Elsewhere,
we are developing the global market especially in Europe for
intraocular lenses (IOLs), which are used in the treatment of
cataracts, and sales are growing steadily. During the fiscal year
under review, we made accounting changes in the treatment of the
bonus points given to Eye City customers when they make
purchases, and as a result a full year’s worth of the reserve fund
was appropriated in one lump sum as sales administrative
expenses for the fourth quarter. In addition to that, R&D costs
increased greatly due to investment in the development of new
products. As a result, the division recorded a decline in operating
income of 3.9% compared with a year earlier.
<Other Business Field>
The Crystal division, another business operated by Hoya, is
engaged in the production and sale of crystal tableware and
interior products. Faced with the contraction in the market for
gifts and increasing competition from overseas products, the