Toshiba 1997 Annual Report Download - page 4

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2.
Toshiba’s consolidated net sales increased 7 percent to ¥5,453.4
billion (US$43,979 million) in the fiscal year that ended March 31,
1997. This growth was driven mainly by strength in several strategic
product sectors, particularly personal computers and peripherals.
While the yen’s depreciation had a positive effect on results, a steep
drop in semiconductor memory prices and lower sales in power sta-
tions and equipment reduced earnings. As a result, operating income
decreased 30 percent to ¥154.3 billion (US$1,244 million), income
before income taxes and minority interest was down 29 percent to
¥125.5 billion (US$1,012 million), and net income declined 26 percent
to ¥67.1 billion (US$541 million).
To Our Shareholders
Results by Segment
Information/communication systems and electronic devices—Sales in this segment were up
14 percent. This performance was mainly a reflection of growth in PC and peripheral sales, as
PC demand expanded worldwide. Toshiba reinforced its leadership in the portable computing
market by introducing the world’s smallest PC in Japan, a move that creates an entirely new
category of this market. We are firmly committed to retaining our number-one share of the
world portable PC market. Although segment sales rose, operating income was down 32
percent as memory chip prices fell sharply.
Heavy electrical apparatus—Orders for nuclear power plants and other power generation
and distribution equipment decreased as Japan’s utilities limited capital spending. This difficult
environment brought about a 5 percent decline in segment sales and a 29 percent drop in
operating income.
Consumer products and others—Toshiba generated a strong market response with several
new models of air conditioners, washing machines, refrigerators and other home appliances.
However, intense competition in Japan held back sales gains. As a result, segment sales were
about the same as in the prior fiscal year. Profitability was aided by cost reductions from
increased overseas procurement and production, as well as other measures. However, despite
these improvements, the segment reported another operating loss. We are determined to
return to profitability as soon as possible. To this end, we are concentrating on creating prod-
ucts that address customers’ needs and that create entirely new markets. At the same time, we
will retain a tight focus on cost containment.