Olympus 2012 Annual Report Download - page 64

Analysis of Business Results
Company Overview
In the global economy during the fiscal year under review, although the Asia region,
particularly China, remained strong as a result of an expansion in internal demand, the
global economy overall remained stagnant due to continued high unemployment rates
in the U.S. and uncertainty over fiscal prospects in some parts of Europe. The
Japanese economy continued to remain in a difficult situation owing partly to restric-
tions on electricity supply and appreciation of the yen, although restoration efforts are
progressing in the aftermath of the Great East Japan Earthquake.
Amid this business environment, the Olympus Group worked to “transform Olym-
pus into a more globally competitive company” and “strengthen our business presence
in the emerging markets” based on the “2010 Corporate Strategic Plan,” which
commenced in the fiscal year ended March 31, 2011.
In the Medical Business, we implemented a variety of measures to minimize the
impact of the earthquake on product supply, and developed large-scale new products
in the gastrointestinal endoscope field and the surgical and therapeutic devices field.
In the Life Science & Industrial Business, we launched new products in ultrasono-
graphic inspection systems, microscopes and industrial endoscopes. Regarding the
Imaging Business, we enhanced the lineup of products compliant with the “Micro Four-
Thirds System” standard and worked to implement cost reductions. As a Groupwide
initiative, we also worked to implement fundamental reform of our corporate gover-
nance system in light of our reflections on the problem of deferred posting of losses,
which was discovered in November 2011.
The Olympus Group’s overall consolidated net sales remained nearly at the same
level as the previous fiscal year, increasing 0.2% year on year to ¥848,548million. This
was due to the impact of the transfer of the inkjet printer business, as well as a decline
in revenue in the Medical Business caused by the effects of foreign exchange and the
earthquake, despite an increase in revenue in the Information & Communication
Business. Although the operating loss in the Imaging Business was reduced, operating
income decreased 7.5% year on year to ¥35,518 million as a result of foreign
exchange effects and other factors.
Net loss was posted at ¥48,985 million (compared with a net income of ¥3,866
million in the previous fiscal year). This was due to factors such as the posting of
impairment loss on business assets in the Imaging Business, and the recording of
¥39,282 million in income taxes including reversal of deferred tax assets due to a
review of future taxable income.
During the fiscal year under review, the Olympus Group invested ¥61,356 million
on research and development, and spent ¥37,961 million on capital investments.
Regarding foreign exchange, the yen appreciated against both the U.S. dollar
and the euro compared to the previous fiscal year, reaching a record-high level particu-
larly against the U.S. dollar. The average exchange rate during the period was ¥79.08
against the U.S. dollar (¥85.72 in the previous fiscal year) and ¥108.98 against the
euro (¥113.12 in the previous fiscal year), which caused net sales and operating
income to drop by ¥25,500 million and ¥5,700 million, respectively, year on year. At a
constant rate of exchange, net sales and operating income rose 3.2% and 7.5%,
respectively, year on year.
Results of Operations
Consolidated net sales in the Medical Business amounted to ¥349,246 million (down
1.7% year on year), while operating income amounted to ¥68,188 million (down 4.9%
year on year).
In the surgical and therapeutic devices field, sales of disposable guide wires
used for endoscope treatment such as for pancreatic ducts continued to be favorable,
particularly in Japan, while sales grew for the VISERA ELITE integrated endoscopic
video system, which supports endoscopic surgery with improved observation capability.
There was an overall decline in revenue in the Medical Business for the period. This
was the result of temporary difficulties in the procurement of parts in our flagship
gastrointestinal endoscope field due to the impact of the Great East Japan Earthquake
and the resulting adjustments we made to the production of some products. However,
sales were solid in the period from October to March, when product supply recovered.
Operating income in the Medical Business declined due to a decrease in revenue
resulting from the impacts of the earthquake and foreign exchange.
At a constant rate of exchange, consolidated net sales and operating income
rose 2.8% and 4.3%, respectively, year on year.
Consolidated net sales in the Life Science & Industrial Business amounted to
¥92,432 million (down 8.3% year on year), while operating income amounted to
¥5,439 million (down 36.4% year on year).
In the life science field, although sales of products for research such as the BX3
series of inverted research microscopes grew in Japan and Asia, net sales decreased
due to worsened market conditions in Europe and the U.S. and foreign exchange
effects.
In the industrial field, revenue increased. This was the result of sales growth
from the ultrasonic nondestructive testing equipment OmniScan MX2, which contrib-
utes to the safety and peace of mind of society, and new industrial videoscope product
IPLEX UltraLite, the lightest and most compact model in the IPLEX series, as well as a
favorable performance in sales of products such as industrial microscopes and optical
measuring devices thanks to brisk conditions in markets related to electrical compo-
nents and semiconductors.
However, there was a decrease in revenue in the Life Science & Industrial
Business overall, partly due to the impact of a decrease in revenue resulting from the
transfer of the inkjet printer business in March 2011.
Operating income in the Life Science & Industrial Business decreased due to the
transfer of the inkjet printer business and the negative results in the life science field,
despite an increase in operating income in the industrial field.
At a constant rate of exchange, consolidated net sales and operating income fell
4.1% and 14.1%, respectively, year on year.
Consolidated net sales in the Imaging Business amounted to ¥128,561 million
(down 2.2% year on year), while operating loss amounted to ¥10,760 million (a
¥4,259 million contraction in operating loss compared with the previous fiscal year).
Revenue declined in the Imaging Business, mainly due to intensified competition
and the impact of the floods in Thailand. This was despite favorable sales of new
products in the OLYMPUS PEN series of interchangeable lens system digital cameras
compliant with the “Micro Four-Thirds System” standard and the contribution from
sales of OLYMPUS OM-D E-M5, the compact, lightweight and high-performance
camera equipped with an electronic viewfinder, in addition to growth in sales of
high-value added models of compact cameras such as the XZ-1, which is of the
highest standard of picture quality for compact cameras.
Regarding the bottom line, operating loss in the Imaging Business was reduced
thanks to an improvement in cost to sales ratio as well as cost reductions.
At a constant rate of exchange, consolidated net sales rose 1.5% year on year and
the operating loss contracted by ¥2,042 million compared with the previous fiscal year.
Financial Review
OLYMPUS 󱚈 Annual Report 2012
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