Epson 2015 Annual Report Download - page 27

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26
3. Analysis of financial condition and results of operations
(1) Analysis of operating results
Revenue
Consolidated revenue was ¥1,086.3 billion, a year-over-year increase of ¥77.9 billion (7.7%).
Revenue for each reporting segment is discussed below.
The information-related equipment segment recorded revenue of ¥907.2 billion, a year-over-year increase of
¥66.0 billion (7.9%). The segment as a whole benefited from foreign exchange effects as well as from the
factors described below.
Inkjet printer revenue expanded sharply despite a decline in ink cartridge printer shipments because a reinforced
lineup of printers with high-capacity ink tanks had strong sales especially in emerging markets. The Company
also reinforced its business inkjet printer lineup for a resolute entry into the business market. At the same time,
the Company launched a managed print services business in Japan. Under this new business model, customers
pay a flat fee for a package that includes printer, ink, and maintenance service. In addition, revenue from
consumables rose along with an improved composition of the install base. In large-format inkjet printers Epson
saw ongoing firm demand in the large-photo and color calibration (proofing) markets. In the professional photo
market, the Company increased revenue from both printers and ink by launching compact, high-performance
new models. In the inkjet textile printing market, the range of applications expanded to encompass everything
from apparel to small personal items and interior goods. Meanwhile, the Company expanded the territories
where we sell direct-to-garment printers to capture opportunities created by a rise in demand for custom and
original T-shirts. Page printer revenue decreased due to a decline in unit shipments, the result of Epson’s focus
on selling high-added-value models. SIDM printer revenue was flat year over year because the effects of a
temporary lull in demand in China and a decline in unit shipments in the Americas and Europe were offset by
foreign exchange effects and increased sales of low-priced models in Asia. POS system product revenue
increased due to unit shipment growth in Europe and expanded sales of label printers for on-demand, in-house
printing. Visual communications revenue increased, owing in part to foreign exchange effects. 3LCD projector
revenue grew sharply in the Americas and Asia. This growth was the result of an expanded and improved lineup
of high-performance products, the special demand generated by the FIFA World Cup, and increased sales in the
education market.
The devices and precision products segment recorded revenue of ¥156.2 billion, a year-over-year increase of
¥7.5 billion (5.1%). The factors that contributed most significantly to this change are described below.
Crystal device revenue fell due to ongoing price erosion in the markets for AT-cut crystal and tuning-fork crystal
products. Semiconductor revenue increased due to growth in internal demand and external sales, including
silicon foundry orders. Watch revenue increased primarily because of growth in sales of premium watches,
which lifted average selling prices, and foreign exchange effects.
The sensing and industrial solutions segment recorded revenue of ¥23.3 billion, a year-over-year increase of
¥7.2 billion (44.6%). In factory automation systems, industrial robot revenue grew on increased orders from
Asia, while IC handler revenue grew on increased orders from manufacturers of semiconductors for
smartphones.
In the “other” segment, revenue was ¥1.3 billion, a 4.2% increase from the previous year.
Cost of sales and gross profit
Cost of sales was ¥690.4 billion, a year-over-year increase of ¥44.5 billion (6.9%). In addition to foreign
exchange effects, the increase in cost of sales is due largely to higher material and processing costs associated
with an increase in revenue.
As a result, gross profit was ¥3,959 billion, up ¥33.3 billion (9.2%) year over year.