Olympus 2013 Annual Report Download - page 32

60 OLYMPUS Annual Report 2013 61OLYMPUS Annual Report 2013
Analysis of Business Results, Financial Position, and Cash Flows
Analysis of Business Results
Company Overview
In the global economy during fi scal 2013, the situation
remained uncertain, mainly as a result of fi nancial instability
in Europe and the deceleration of growth rates in China
and other emerging countries. In the Japanese economy,
conditions continued to be diffi cult owing to the constant
threat of economic downturns overseas, despite signs of
a moderate domestic rebound mainly driven by demand
related to recovery from the Great East Japan Earthquake
and economic measures taken following a change in
administration at the end of 2012.
Amid these diffi cult conditions, the Olympus Group
formulated the corporate strategic plan known as the
medium-term vision. This plan was commenced in fi scal
2013 under the guidance of the new management team that
assumed offi ce on April 20, 2012. Under this new
management structure, the Group positioned “rebuilding of
business portfolio and optimaizing allocation of management
resources,” “review and reduction of costs,” “restoration of
fi nancial health,” and “restructuring of corporate governance”
as its basic strategies. It also steadily implemented various
initiatives, including transferring the Information &
Communication Business, entering into a business and
capital alliance with Sony Corporation, and submitting a
written affi rmation on the internal control system with the aim
of facilitating the removal of the Security on Alert designation
placed on the Company’s stock by the Tokyo Stock
Exchange. This designation was lifted on June 11, 2013.
Looking at the Olympus Group’s focus business areas,
in the Medical Business, we launched new products in
Japan and overseas in our fl agship gastrointestinal
endoscope fi eld, and these products contributed to higher
earnings. In the Life Science & Industrial Business, we
introduced new laser scanning microscopes and industrial
videoscopes. As for the Imaging Business, we enhanced
our lineup of mirrorless cameras and implemented cost
reduction measures.
In fi scal 2013, R&D expenses amounted to ¥63,379
million and capital expenditures totaled ¥28,109 million.
In regard to foreign exchange, the yen initially appreciated
against both the U.S. dollar and the euro in comparison with
the previous fi scal year. However, in December 2012, the yen
began to depreciate rapidly. The average exchange rate
during fi scal 2013 was ¥83.10 against the U.S. dollar (¥79.08
in the previous fi scal year) and ¥107.14 against the euro
(¥108.98 in the previous fi scal year). This increased net sales
by ¥12,800 million and operating income by ¥200 million.
• Net Sales
Consolidated net sales decreased 12.3% year on year,
to ¥743,851 million. This was because the impacts of the
transference of the Information & Communication Business
and lower sales in the Imaging Business, a result of a shrinking
compact camera market, outweighed the benefi ts of higher
sales in the Medical Business.
0
1,000
800
600
400
200
848.5
743.9
2012/3 2013/3
(¥ Billion)
Medical
Business
+45.5
Life Science &
Industrial
Business
(6.9)
Imaging
Business
(20.9)
Information &
Communication
Business
(115.2)
Others
(7.2)
• Operating Income
Operating income remained the same level as the previous
fi scal year, declining only 1.2% year on year, to ¥35,077
million, as the substantial increase in segment profi t in the
Medical Business offset the rise in segment loss in the
Imaging Business.
0
60
50
40
30
20
10
35.5 35.1
2012/3 2013/3
Medical
Business
+18.9
Life Science &
Industrial
Business
(1.9)
Imaging
Business
(12.3)
Information &
Communication
Business
(3.6)
Others
+3.1
Elimination or
corporate
(4.6)
(¥ Billion)
• Net Income
Net income was ¥8,020 million, compared with a net
loss of ¥48,985 million in fi scal 2012. This refl ected the
recording of extraordinary income of ¥22,454 million,
mainly resulting from the transfer of the Information &
Communication Business, as opposed to the recording
of extraordinary losses of ¥16,358 million, which included
impairment loss on business assets in the Imaging
Business, in addition to income taxes of ¥10,900 million.
Performance by Segment
• Medical Business
In the Medical Business, consolidated net sales were
¥394,724 million (up 13.0% year on year) and operating
income was ¥87,069 million (up 27.7% year on year).
In our fl agship gastrointestinal endoscope fi eld, we
launched a new endoscopic videoscope system in Japan
and overseas. Also, sales of EVIS EXERA III were strong
overseas while EVIS LUCERA ELITE performed well in
Japan. These factors made signifi cant contributions to
higher sales. In the surgical and endotherapy device fi eld,
strong sales continued for the VISERA ELITE surgical video
endoscopy system. As a result, sales were up in the
Medical Business. Operating income likewise increased
following higher sales.
• Life Science & Industrial Business
In the Life Science & Industrial Business, consolidated net
sales amounted to ¥85,513 million (down 7.5% year on
year) and operating income totaled ¥3,527 million (down
35.2% year on year).
In the life science fi eld, we introduced the new FV1200 and
FV1200MPE into our lineup of FLUOVIEW laser scanning
microscopes. In the industrial fi eld, meanwhile, sales were
strong for our ultrasonic, precision thickness gages. Regardless
of these factors, overall net sales were down in the Life Science &
Industrial Business due to the impacts of limited capital expenditure
and budget delays among public research institutions stemming
from the global economic recession. Operating income similarly
decreased regardless of the benefi ts of production structure
reforms and other efforts to reduce the cost of sales.
In the fourth quarter of fi scal 2013, both net sales and
operating income showed year-on-year increases due to
the benefi ts of fl uctuations in foreign exchange and signs of
recovery in domestic economic conditions.
• Imaging Business
In the Imaging business, consolidated net sales amounted
to ¥107,638 million (down 16.3% year on year), while
operating loss was ¥23,073 million (compared with an
operating loss of ¥10,760 million in the previous fi scal year).
OLYMPUS OM-D E-M5, a high-performance mirrorless
camera equipped with such features as an electronic
viewfi nder and the world’s fi rst 5-axis image stabilization system,
posted higher domestic and overseas sales. Meanwhile, sales
were strong for new high-value-added camera models, such
as the TG-1 and TG-2 high-resolution compact cameras that
feature Olympus-levels of toughness and bright F2.0 lenses.
Nevertheless, the spread of smartphones resulted in a sharp
contraction in the compact camera market, driving down both
sales volumes and selling prices. As a result, overall sales
declined in the Imaging Business. While we worked to reduce
costs, the lower sales resulted in an increase in the operating loss.
• Information & Communication Business
In the Information & Communication Business, consolidated
net sales amounted to ¥114,243 million (down 50.2% year
on year), while operating income totaled ¥1,704 million
(down 67.7% year on year).
On September 28, 2012, the Company transferred its
Information & Communication Business to IJ Holdings Inc.,
a wholly owned company of a partnership operated and
managed by Japan Industrial Partners, Inc. Net sales and
operating income fi gures are therefore for the period from
the start of the fi scal year until the date of transference.
• Others
In the Others Business, consolidated net sales amounted to
¥41,733 million (down 14.7% year on year) and operating
loss was ¥4,870 million (compared with an operating loss
of ¥7,992 million in the previous fi scal year).
Due to progress in the disposal of unprofi table
businesses, there were declines in both net sales and
the operating loss.
Fiscal 2014 Outlook
An overall recovery trend is expected in the global economy.
However, there still remains concern for economic downturn in
such forms as the prolonged fi nancial instability in Europe and
the deceleration of economic growth in emerging countries. In
the Japanese economy, conditions remain diffi cult, but there is
hope for a gradual recovery trend to occur due to the benefi ts
of the economic stimulus measures instituted by the new
government and continued yen depreciation.
In this environment, the Olympus Group will continue to
focus on the advancement of the four basic strategies defi ned
in its medium-term vision: “rebuilding of business portfolio
and optimaizing allocation of management resources,”
“review and reduction of costs,” “restoration of fi nancial
health,” and “restructuring of corporate governance.” In the
Imaging Business, which continues to record losses, the
Group will work to improve earnings while prioritizing risk
minimization.
In the Medical Business, we will work to maintain our
overwhelming market share by launching new products in the
gastrointestinal endoscope fi eld. Efforts in the surgical business
will be focused on achieving further growth by expanding
the scope of our product lineups to include the areas of
operating room imaging and energy devices. In the Life Science
& Industrial Business, we will reform revenue structures and
launch new products in growth fi elds. Meanwhile, in the
Imaging Business, we will work to improve performance by
signifi cantly reducing sales volume targets to counter
expected shrinking in the compact camera market and by
focusing investment in the growing mirrorless camera fi eld.
Financial Position
Total Assets
As of March 31, 2013, total assets stood at ¥960,082
million, down ¥6,444 million from a year earlier. Total current
assets increased ¥14,479 million following an increase in
cash and deposits, while investments and other assets
decreased ¥22,917 million due to such factors as
amortization of goodwill and sales of investment securities.
0
1,000
800
600
400
200
966.5 960.1
2012/3 2013/3
Current assets
+14.5
Property, plant and equipment
+2.0
Intangible
assets
(22.5)
Investments and
other assets
(0.4)
(¥ Billion)