Epson 2015 Annual Report Download - page 23

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22
Business Conditions
1. Overview of business results
(1) Operating results
On the whole, the global economy continued its gradual recovery during the year under review. Regionally, the
U.S. economy continued to expand, with strong consumer spending and solid job growth. The European
economy as a whole continues to pick up, but elements of uncertainty, such as a recession in Russia and the
rekindling of fiscal problems, remain. China’s growth rate slowed. However, the Indian economy picked up, and
the economies of ASEAN countries also continued to gradually recover. Although a temporary dip was seen
following a hike in the consumption tax, the Japanese economy continued to gradually recover on the whole,
largely due to an improved export environment owing to the weaker yen, the effects of government economic
measures, and lower crude oil prices.
The main markets for the products of the Epson Group (“Epson”) fared as follows.
Demand for inkjet printers remained firm in Europe but contracted in Japan compared to last year due to
delayed recovery in consumer spending following the consumption tax hike. Demand also decreased slightly in
North America. Demand for large-format printers decreased somewhat in Japan but moved sideways in Europe
and remained firm in the United States. Demand for serial-impact dot-matrix (SIDM) printers is slipping in the
Americas and Europe, and is now on a downward trend in China, where demand for SIDM printers used in tax
collection systems has temporarily run its course. Demand for point-of-sale (POS) system products was similar
to that in the same period last year in both the Americas and Europe. Demand for projectors was firm thanks
largely to growth in the Americas and Asia, where the FIFA World Cup helped drive unit sales higher in the first
half of the year.
In the main markets for Epson's electronic devices demand was mixed. While demand for feature phones
continued to decelerate, there was firm demand for smartphones. Digital camera market demand was sluggish.
In the precision products market, Japanese demand for watches temporarily contracted, particularly for
premium models, following a run-up in sales prior to the increase in the consumption tax, but demand has
gradually recovered in the latter part of the period. Markets were solid in the Americas and Europe. Industrial
robot demand increased in the smartphone and automotive sectors, while demand for IC handlers was also firm.
Given the foregoing market conditions, Epson established the SE15 Updated Mid-Range Business Plan
(FY2013–FY2015), in March 2013. Under the updated three-year plan, we have maintained the basic strategic
course charted by the SE15 Long-Range Corporate Vision. The basic strategy has been to manage our
businesses so that they create steady profit while avoiding the single-minded pursuit of revenue growth. Our top
priority has been steady profit and cash flow. To achieve this in the existing segments, we have been readjusting
our product mixes and adopting new business models. Meanwhile, we have been aggressively developing
markets in new segments.
The average exchange rates of the yen against the U.S. dollar and of the yen against the euro during the year
under review were ¥109.93 and ¥138.77, respectively. This represents 10% depreciation in the value of the yen
against the dollar and 3% depreciation in the value of the yen against the euro, year over year.
The foregoing factors are reflected in our consolidated financial results for the 2014 fiscal year, the second year
of our updated business plan. Revenue was ¥1,086.3 billion ($9,040,034 thousand), up 7.7% year over year.
Business profit was ¥101.2 billion ($842,773 thousand), up 12.4% year over year. Profit from operating
activities was ¥131.3 billion ($1,093,284 thousand), up 65.2% year over year. Profit before tax was ¥132.5
billion ($1,102,904 thousand), up 70% year over year. Profit for the period was ¥112.7 billion ($938,545
thousand), up 33.6% year over year.
(Note) Business profit is calculated by subtracting Cost of sales and Selling, general and administrative
expenses from Revenue.
A breakdown of the financial results in each reporting segment is as follows.