Wacom 2004 Annual Report Download - page 11

Wacom Annual Report 2004 9
FINANCIAL REVIEW
Market Environment and Business
Results
Although there were some signs of economic recovery in
Japan during the first half of the fiscal year under
review---including rising stock prices---the general
economic climate remained sluggish under the cloud of
uncertainties surrounding the Middle East situation, the
disorder in the Asian markets arising from the spread of
the SARS epidemic, and the slowdown in the U.S.
economy. In the second half of the fiscal year, the yen
grew gradually stronger and reached the neighborhood
of ¥ 105 against the dollar by the fiscal year end,
mirroring the expanding U.S. trade deficits and the
moderate business upturn in Japan that resulted from
steady growth in exports and capital expenditures.
Under such business conditions, we encouraged
greater market recognition of our original product
groups (including promoting new uses, etc.),
strengthened our marketing structure, and developed
new products, all while flexibly dealing with the changes
in the market environment. As a result, for the fiscal year
under review, we achieved net sales of ¥ 16,515 million,
or U.S. $156 million (up 9.8% year-on-year); operating
income of ¥ 1,702 million, or U.S. $16 million (up 64.5%
year-on-year); and net income of ¥ 589 million, or U.S. $6
million (up 17.2% year-on-year).
Business Results by Segment
(1) ESD Business
The ESD business faced a difficult market environment
during the first half of the fiscal year, but it was able to
generate stable full-year results as business in the
professional sector improved and IT investments in the
U.S. recovered during the second half. The market
rollout of Wacom FAVO, our new consumer product,
contributed substantially to our business results by
appealing to---and creating demand from---new groups
of customers who had little previous interest in pen
tablets. The Cintiq 18SX/C-1800SX integrated LCD tablets
sold well in the professional graphics sector, including
the U.S. automotive and motion picture production
industries. Demand for integrated LCD tablets also grew
steadily in the medical sector due to companies adopting
them for large-scale chart systems.
Furthermore, pen sensor components helped stabilize
our business performance, as we acquired new tablet PC
customers and our existing customers commenced
volume production of new models. As a result, sales
Net sales (Millions of Yen) Gross profit (Millions of Yen) Operating income (Millions of Yen)
’01 ’02 ’03 ’04’00
6,218 6,672 6,220
7,442
8,585
928 909
402
1,035
1,702
12,214 13,158 12,325
15,037
16,515
’01 ’02 ’03 ’04’00 ’01 ’02 ’03 ’04’00