Epson 2015 Annual Report Download - page 32

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5. Issues for Fiscal 2015
At the start of the 2013 fiscal year Epson began working under an updated three-year plan called the Updated
SE15 Second-Half Mid-Range Business Plan (FY2013–FY2015). We have been closely adhering to the
strategic course charted by the SE15 Long-Range Corporate Vision and, in line with the updated plan, are
pursuing a basic strategy of managing our businesses so that they create steady profit while avoiding the
single-minded pursuit of revenue growth. Our top priority will be steady income and cash flow. To achieve this
in existing segments, we will readjust our product mixes and adopt new business models. Meanwhile, we will
aggressively develop markets in new segments. Working under a new mid-range plan from the 2016 fiscal year,
we will move steadily forward to lay the foundation for a metamorphosis during which Epson will change from
being primarily a company that provides consumer imaging products into a company that once again posts
strong growth by creating and providing new information solutions and equipment for businesses and
professionals, as well as consumers.
Although the outlook is not entirely clear, the global economy as a whole is expected to continue growing. The
economies of the U.S. and other developed countries are by and large in recovery mode, but economic growth is
seen slowing in some emerging nations. Society is changing, shifting increasingly toward sustainable industry
and sustainable economic activity. This trend will likely alter the kind of customer value that Epson will need to
provide.
In this type of business environment, we will remake Epson into a company that once again posts strong growth.
We will achieve this by focusing our management resources on the four areas described below, where we can
continue to leverage the strengths of our unique core technologies, by expanding our business segments, and by
building stronger new businesses that will support the Company’s growth in the future. Ultimately, we aim to
consistently achieve a return on sales (business profit*/revenue) of 10% and return on equity (profit for the
period/equity attributable to owners of the parent company) of 10% or more as early as possible by remaining
even more mindful of the cost of capital.
*Business profit is very similar to operating income under Japanese accounting standards (J-GAAP), both conceptually and
numerically. Epson began using business profit as an indicator after adopting International Financial Reporting Standards (IFRS)
in FY2014 to facilitate comparisons with past results.
Strategies in Each Area
Printing
In printing, we will look to use Epson’ s unique Micro Piezo inkjet technology to create an innovative printing
environment. In inkjet printers, we will work to sell more high-end consumer models, which tend to generate
higher print volume. We will also continue to upgrade and expand our lineup of products tailored to the needs
of consumers in emerging countries. We will launch powerful new office printers equipped with state-of-the-art
Micro Piezo print-heads and build up our managed print services business, a new business model, to further
increase our competitiveness. Digital inkjet printing systems are increasingly replacing conventional analog
systems in the commercial, industrial, and business printing markets, where they are used to print everything
from billboards to wrapping film for food products to textiles. By creating new customer value in the form of
shorter production processes and lower environmental impact, we will tap more deeply into these markets and
build strong core businesses that will sustain future growth. In business systems, we will achieve steady income
growth by uncovering new demand while maintaining a grip on the top share in existing segments.
Visual Communications
In the visual communications business we will create new forms of visual communication using micro-display
technology. Epson is the leader in liquid-crystal projectors and has a high market share in the home and
business segments. However, to expand the business and increase our earnings power, we also want to further
elevate our position in the high-lumen, short-throw, and ultra-short throw projector niches, and to do so, we will
enhance our ability to propose solutions and will build up our sales network. Epson’ s smart glasses have the