Pentax 2013 Annual Report Download - page 74

Financial Review
Copyright 2013 © HOYA CORPORATION
6
Income
Profit before taxes amounted to ¥89,368 million and profit for the year amounted to ¥71,242 million, marking a
significant year-on-year increase of 52.7% and 66.9%, respectively. The pretax profit margin was 24.0%, an
increase of 8.5 percentage points over the previous fiscal year's level of 15.5%.
As for other income, the eyeglass lens business recorded ¥32,187 million in insurance income as part of
compensation for fixed assets and lost profit suffered from the flooding in Thailand and ¥2,238 million as a gain
on step acquisitions, associated with the additional acquisition of shares in Optotal Hoya LIMITADA (formerly
Optotal Hoya S.A.), HOYA's affiliate engaged in the manufacturing and sales of eyeglass lenses in Brazil, which
became a wholly owned subsidiary. In addition, the yen depreciated against other major currencies toward the
end of the fiscal year, which resulted in recording foreign exchange gain of ¥12,539 million on foreign currency-
denominated cash and deposits, and credits and debts which were held by the Group, and loans and
borrowings within the Group. Moreover, share of losses from associates of ¥11,912 million was recorded for the
structural reforms of AvanStrate Inc., an equity-method affiliate. Even after excluding these extraordinary factors,
profit before taxes for the current year exceeded year-on-year.
In the Information Technology segment, mask blanks for semiconductors secured a similar level of sales to the
previous year, despite the sluggish semiconductor market, as HOYA became more competitive in the blanks
market. As for photomasks for LCD panels, sales of small- and medium-sized photomasks for smartphones and
tablet PCs were firm, while sales of large-sized ones for LCD televisions showed signs of a recovery toward the
end of the fiscal year and drove earnings. On the other hand, sales of glass memory disks for HDDs were
affected by the shift in demand from notebook PCs to other products, including tablets and smartphones, and
were subdued. Among imaging related products, sales of optical lenses declined in the second half of the fiscal
year, due to the shrinking digital camera market. As a result, the Information Technology segment recorded profit
before tax of ¥31,841 million and a segment profit margin of 19.7%.
In the Life Care segment, the major plants in Thailand which suspended operations as a result of the massive
flooding resumed operations in April 2012, and sales of eyeglass lenses recovered to the pre-flooding level by
the fourth quarter of the fiscal year. In addition, Optotal Hoya LIMITADA (formerly Optotal Hoya S.A.), HOYA's
affiliate engaged in manufacturing and sales of eyeglass lenses in Brazil, became a wholly owned subsidiary,
while the eyeglass lens development and manufacturing business of Seiko Epson Corporation was transferred
to HOYA. These developments contributed to an increase in sales and profit in the eyeglass lens business
compared to the previous year. At the same time, the Eye City chain of contact lens specialty stores enjoyed
continued growth in sales and profit from the previous fiscal year, thanks to new store openings and growth in
sales of high-value-added lenses. The medical endoscope business also achieved increased sales and profit
against the previous year thanks to brisk sales mainly in emerging markets such as Russia, the Middle East, and
Asia. In addition, the launch of new products stimulated replacement demand in some regions and the trend of
the weaker yen contributed positively. With regard to intraocular lenses (IOL), we ranked No. 1 in sales in the
domestic market and enjoyed strong sales. In the fourth quarter, however, we suspended supply of some
products and undertook a voluntary recall of those products because incidence rates of inflammation and
endophthalmitis were reported to have exceeded certain levels in the third quarter. This resulted in a decrease in
sales and profit from the previous year.
In sum, the Life Care segment offset the profit decline for intraocular lenses with profit growth in other
businesses and posted pretax profit of ¥63,954 million and a segment profit margin of 30.6%. Pretax profit
included ¥32,187 million in insurance income as part of compensation for damage caused by the Thai flooding in
October 2011 and ¥2,238 million as a gain on step acquisitions, associated with the additional acquisition of
shares in Optotal Hoya S.A. Excluding such factors, segment pretax profit would have been ¥29,529 million with