Wacom 2012 Annual Report Download - page 12

Overview of Business Performance
How did the global economy affect
our business in our 29th year?
Wacom Co., Ltd. and Its Subsidiaries
For the fiscal year ended March 31, 2012 of our 29th year under review,
the operating environment for Wacom Group was influenced by the
suspension of manufacturing and a weak domestic economy in Japan in
the aftermath of the Great East Japan Earthquake during the first quarter,
and subsequently in the second quarter by disruptions to the supply
chain for PCs and other products due to flooding in Thailand. Globally,
the US economy appeared to stabilize somewhat with improvements in
employment and other factors, while in Europe uncertainty increased
amid the continued debt crisis. Although relatively high growth rates con-
tinued in emerging economies such as China and India, a number of
factors caused a slowing of this growth, including inflation concerns and
a decrease in exports to Europe.
The yen remained strong against the US dollar and the euro, and this
adversely impacted the performance of Wacom Group. In the IT industry,
there was rapid growth in new product categories such as smartphones
and tablets, while major manufacturers of PC and mobile phone handsets
undertook initiatives to expand their product line and establish their posi-
tions in these new markets.
In markets where Wacom Group offers products, a number of trends were
evident. In Professional Products, 3D production progressed and the
adoption of digital design technology accelerated in the movies and
games industries. In Asia, industrial design and digital content industries
expanded. In Consumer Products, there has been growth in the use of
electronic pens for illustrations, photo retouching and web design, as well
as for communication on social networks such as facebook. The spread
of tablet and e-book devices has revealed a strong need for natural and
intuitive input by hand. In Business Products, the use of LCD tablet prod-
ucts is increasing, with a growing demand for improved security and
paperless environments across a broad range of sectors, including medi-
cine, education and finance. Electronic settlement using digital signatures
is attracting particular attention as a highly effective way to protect indi-
vidual information, improve operational efficiency and reduce document
handling costs. In Component business, there is a growing need for pen
and/or multi-touch technology for Windows and Android tablet PCs,
tablet devices, smartphones, e-book readers and other such devices.
Moreover, there are also opportunities in the emerging category heralded
by the October announcement in Europe of Samsung’ s Galaxy Note, a
smartphone that incorporates a pen function.
Wacom Group’ s activities for the year under review included announcing
and launching a record number of new products in the market, while con-
tinuing to manage business risks such as natural disaster and foreign
exchange rate fluctuations. We expanded our lineup of products for tablet
devices, pursued web-based and other marketing initiatives, enhanced
our supply chain management, worked on the development of new tech-
nology, and took steps to improve operating profitability. We also intro-
duced a new ERP system, which has been performing steadily since
August, as part of our investment in IT systems to support higher produc-
tivity and growth.
During the year we recorded extraordinary losses for a number of items,
including expenses concomitant with withdrawal from our pension fund
after it had been deemed an increasing financial risk, repair costs for
head office premises damaged in the Great East Japan Earthquake, and
expenses associated with the planned July 2012 transfer of the Tokyo
branch office.
Accordingly, for the full year Wacom Group’ s consolidated net sales
increased 23.2% to ¥40,705 million, operating income increased 25.1% to
¥4,067 million, ordinary income increased 15.7% to ¥3,891 million and net
income increased 10.9% to ¥2,181 million.
0
2,000
4,000
6,000
8,000
10,000
0
5
10
15
20
25
30
40
50
60
70
80
(Millions of yen)
(%)
(%)
’08 ’09 ’10 ’11 ’12
’08 ’09 ’10 ’11 ’12
’08 ’09 ’10 ’11 ’12
(For the year’s ended March 31)
(For the year’s ended March 31)
(For the year’s ended March 31)
(ROE)
(ROA)
Note: Common shares were split on a four-for-one basis on November
18,2005. Per share data before 2005.3.F.Y.term reflect the above
share splits.
Net income per share (basic)
ROE/ROA
Equity ratio
4,895
5,464
8,349
6,214
4,900
10.7
7.1
11.7
7.1
20.1
12.9
14.2
10.9
7.3
9.4
68.1
63.5
69.4
64.8
Note 1: ROA equals net income/average total assets.
Note 2: During its 23rd fiscal year, the Group procured through a
public offering approximately 4.2 billion yen in capital funds
by allocating new shares to a third party.
55.2
21
(For the year’s ended March 31)
(For the year’s ended March 31)
Overview of Business Performance
Wacom Co., Ltd. and Its Subsidiaries
’12 28,507
26,466
’11
(Millions of yen)
(Millions of yen)
Sales
Operating
income
Tablet Business
UP 7.7%
DOWN 9.0%
5,125
5,630
’12
’11
Operating
income
Operating
income
1,091
△236
’12
’11
2012
¥40,706
Sales Breakdown by Business
6,117
11,683
’11
’12
(Millions of yen)
(Millions of yen)
Sales
Component Business
UP 91.0%
1.4%
Tablet Business %
2011
¥33,030
Other Business 1.3%
Component Business 28.7%
Component Business 18.5%
Tablet Business 70.0
80.1
%
Our results by business sector
Tablet business
Although business in this area was affected by the strength
of the yen, sales increased as a result of new product
releases. In Professional Products, new products included
the extremely sophisticated Cintiq 24HD and the Intuos 5
were well received and sales grew steadily. We also
released Inkling, a digital pen, which was selected by TIME
magazine as one of its Top 50 inventions in 2011. In Con-
sumer Products, sales of the Bamboo series were broadly
unchanged, reflecting weakness in the European and North
American markets. However, overall sales progressed
steadily, supported by continued strong sales of Bamboo
Stylus pens for the iPad. In Business Products, we doubled
sales of our digital signature tablets. However, overall sales
in the category declined by the termination of a certain OEM
project in the U. S. Looking at sales by region, in U. S., sales
were largely with a decline in Business Products offset by
steady progress in sales of Professional Products and Con-
sumer Products. In Europe, sales increased steadily in all
product lines, supported by the launch of new products. In
Japan, sales increased with the impact of the earthquake
disaster offset by such factors as strong sales of the Cintiq
series and growth in Consumer Products. In Asia & Oceania,
overall performance was firm. Reflecting the above initia-
tives and outcomes, sales in the Tablet business category
increased 7.7% to ¥28.51bn, with operating income
decreasing 9.0% to ¥5.12bn.
Component business
Sales increased significantly, primarily due to the start of
commercial production of Wacom’ s pen-sensor system
adopted by Samsung for its Galaxy Note smartphone. Solid
shipments were also made of products destined for use in
Windows PCs, tablet devices, smartphones, e-book read-
ers, etc. In new product development, progress was made
in developing a new sensor controller IC, a Windows
8-compatible sensor system, and in other areas. Reflecting
the above initiatives and outcomes, sales in the Compo-
nents business category for the year ended March 31, 2012
increased 91.0% to ¥11.68bn, with operating income of
¥1.09bn compared to an operating loss in the previous year
of ¥0.24bn.
Other business
In Software business, sales increased steadily due to
improved operating efficiency arising from stronger partner-
ships with major domestic distributors, along with the com-
mencement of a harness sales proposal approach. Sales
were also supported by the launch of a new version of
ECAD dio 2012, enhanced to facilitate large-scale design.
Sales in the Other business increased 15.3% to ¥0.52bn,
with operating income of ¥0.07bn compared to an operating
loss in the previous year of ¥0.15bn.
447
’11
515
’12
Sales
Other Business
UP 15.3%
△150
’11
70
’12
Other Business
22