Olympus 2015 Annual Report Download - page 35

Message from the CFO
Millions of yen
Consolidated 2010/3 2011/3 2012/3 2013/3 2014/3 2015/3
Net sales
Domestic 373,163 386,502 398,237 287,025 172,583 161,432
Overseas 509,923 460,603 450,311 456,826 540,703 603,239
Total 883,086 847,105 848,548 743,851 713,286 764,671
Percentage change compared
with previous year (%) (10.0%) (4.1%) 0.2% (12.3%) (4.1%) 7.2%
Selling, general and administrative expenses 347,125 349,306 348,287 343,121 367,011 398,889
Percentage of net sales (%) 39.3% 41.2% 41.0% 46.1% 51.5% 52.2%
Percentage of net sales excluding
R&D expenditures (%) 32.3% 33.3% 33.8% 37.6% 42.1% 42.5%
Operating income 61,160 38,379 35,518 35,077 73,445 90,962
Percentage of net sales (%) 6.9% 4.5% 4.2% 4.7% 10.3% 11.9%
Net income (loss) 52,527 3,866 (48,985) 8,020 13,627 (8,737)
Percentage of net sales (%) 5.9% 0.5% — 1.1% 1.9% —
EBITDA margin*1 (%) 13.1% 9.9% 9.5% 10.6% 16.8% 18.5%
EBITDA margin (Medical Business)*2 (%) 29.2% 26.9% 26.6% 29.0% 29.7% 29.1%
R&D expenditures 61,850 67,286 61,356 63,379 66,796 74,101
Percentage of net sales (%) 7.0% 7.9% 7.2% 8.5% 9.4% 9.7%
Capital expenditures*334,323 32,699 37,961 28,109 37,810 47,743
Depreciation and amortization 43,099 34,188 33,787 33,899 36,850 41,219
Amortization of goodwill 11,854 11,619 11,103 9,683 9,457 9,421
Sales by region
Japan 373,163 386,502 398,237 287,025 172,583 161,432
North America 196,076 182,009 165,263 177,233 216,098 249,896
Europe 188,527 154,363 156,149 157,179 184,012 195,223
Asia and Oceania 100,045 97,293 107,304 102,395 118,717 139,274
Others 25,275 26,938 21,595 20,019 21,876 18,846
Average exchange rate
Yen / U.S. dollar 92.85 85.72 79.08 83.10 100.24 109.93
Yen / Euro 131.15 113.12 108.98 107.14 134.37 138.77
Balance Sheet, Cash Flows, and
Financial Indicators
Total assets*41,104,528 1,019,160 966,526 960,239 1,027,475 1,081,551
Total net assets*4163,131 115,579 48,028 151,907 331,284 357,254
Equity ratio (%) 14.1% 11.0% 4.6% 15.5% 32.1% 32.9%
Interest-bearing debt 661,481 648,787 642,426 560,390 415,831 354,421
Net debt 454,698 435,226 442,338 330,780 163,710 144,546
Inventories 89,959 92,929 102,493 99,307 98,595 107,387
Inventory turnover period (months) 1.3 1.3 1.4 1.6 1.7 1.6
Cash and cash equivalents at end of year 203,013 210,385 198,661 225,782 251,344 209,809
Cash flows from operating activities 76,245 30,469 30,889 25,233 72,388 66,811
Cash flows from investing activities (20,967) 19,003 (35,735) 33,455 (20,273) (39,612)
Cash flows from financing activities 17,355 (37,359) (5,761) (42,436) (39,693) (70,185)
Return on equity (ROE) (%) 40.6% 2.9% (62.3%) 8.3% 5.7% (2.6%)
Return on assets (ROA) (%) 4.9% 0.4% (4.9%) 0.8% 1.4% (0.8%)
Net income (loss) per share (yen) 194.90 14.39 (183.54) 28.96 41.05 (25.53)
Total equity per share (yen) 576.63 421.37 167.76 493.30 962.83 1,038.64
Price earnings ratio (PER)*5 (times) 15.4 160.8 — 76.4 80.2 —
Price book-value ratio (PBR) (times) 5.2 5.5 8.1 4.5 3.4 4.3
Outstanding market value (billions of yen) 813.9 627.7 367.3 675.8 1,127.4 1,530.0
Cash dividends per share (yen) 30 30 — — — 10
Number of employees*6 (people) 35,376 34,391 34,112 30,697 30,702 31,540
Average number of temporary employees (—) (5,336) (5,009) (2,240) (2,978) (1,374)
*1. EBITDA = Operating income + Depreciation and amortization that is included in cost of sales or SG&A expenses + Amortization of goodwill that is included in SG&A expenses.
EBITDA margin = EBITDA / Net sales
*2. At the Company, EBITDA (Medical Business) is calculated using the following assumptions: EBITDA (Medical Business) = Segment profit in the Medical Business + Depreciation and amortization
that is included in cost of sales or SG&A expenses + Amortization of goodwill that is included in SG&A expenses. EBITDA margin (Medical Business) = EBITDA (Medical Business) / Net sales
*3. Capital expenditures are calculated based on the definition of capital expenditures in accordance with ASBJ Statement No. 17 “Accounting Standard for Disclosures about Segments of an
Enterprise and Related Information.”
*4. In line with the issuance of IAS No. 19 “Employee Benefits” (revised on June 16, 2011) to be applied for fiscal years beginning on or after January 1, 2013, certain overseas subsidiaries
adopted IAS No. 19 effective this fiscal year and changed their method of recognizing actuarial gain or loss. This change has applied retroactively to the figures for the fiscal year ended
March 31, 2013.
*5. Price earnings ratio (PER) for the fiscal years ended March 31, 2012 and 2015 are omitted as Olympus recorded net loss for these fiscal years.
*6. The average number of temporary employees is stated in parentheses from the fiscal year ended March 31, 2011 as the number of temporary employees is over 10% of the total number
of employees.
Financial Summary
(For the fiscal years as of / ended March 31)
Financial Strategy: Improving Capital Efficiency
Aiming to use capital more efficiently, return on invested capital
(ROIC) was positioned as a key performance index under the
medium-term vision (corporate strategic plan). This index displays
the degree of efficiency with which we are able to create returns
through our business by investing the capital procured from our
shareholders and from financial institutions. As such, it is perhaps
the index that is most appropriate for gauging our progress with
regard to one of the four basic strategies of the medium-term
vision: “rebuilding of business portfolio / optimizing allocation
of management resources.” For this reason, we endeavored to
improve corporate value over these three years by emphasizing
ROIC and, consequently, capital efficiency in management.
In addition to ROIC, the medium-term vision also posi-
tioned as key performance indices the operating margin, free
cash flow, and the equity ratio. This decision was based on the
belief that management focused on improving these four indi-
ces constitutes shareholder-centric management and contributes
to increased shareholder value.
Our progress on this front has been strong, with the oper-
ating margin, an indicator of business profitability, and the equity
ratio, an indicator of financial soundness, both achieving the
levels targeted for fiscal 2017 three years ahead of schedule in
fiscal 2014. This success represents a substantial improvement
in the Company’s financial base, which is even more impressive
given the short period of only three years over which this feat was
accomplished. This seemingly herculean task was completed by
boosting earnings from the Medical Business and other busi-
nesses, and then utilizing the resulting cash flows to reduce
interest-bearing debt, and by procuring additional capital from
overseas. ROIC also showed a pronounced improvement,
rising from 2.7% in fiscal 2012 to 8.0% in fiscal 2015. This
improvement was a result of increases in asset efficiency real-
ized through the complete reorganization of non-core business
domains, which included such businesses as the Information &
Communication Business and the biologics business. Free cash
flow as well is making smooth progress toward its fiscal 2017
target, having remained in the positive for three consecutive
years, regardless of aggressive capital expenditures in the
Medical Business.
With regard to return on equity (ROE), an index that has
been garnering attention in recent years, a negative figure was
posted in fiscal 2015 as a result of the substantial extraordinary
Director, Senior Executive Managing Officer,
Chief Financial Officer
Yasuo Takeuchi
We will conduct management
emphasizing growth, capital efficiency,
and financial soundness, as well as
the balance between these points.
Prioritizing investment on our central
growth pillar—the Medical Business—
we will expand Olympus’ operations
in order to realize ongoing investment
returns and consistent shareholder returns.
67
OLYMPUS Annual Report 2015
66 OLYMPUS Annual Report 2015