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Message from the CEO
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Message from the CEO
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We wish to begin this report to you as always with our sincere appreciation for your interests and continuing support for our efforts in our business.
I wish to report to you about our activities and financial results during the third quarter of our 65th fiscal year (April 1, 2011 through December 31, 2011), as started below.
During the first three quarters of the consolidated fiscal year under review (from April 1, 2011 to December 31, 2011), the Japanese economy continued to face difficult circumstances, given the weakness of global economies fanned by Europe’s financial crisis, the appreciation of the yen, and the resurgence of disrupted supply chains affected by the flooding in Thailand in October, which overshadowed signs of steady recovery from the effects of the Great East Japan Earthquake.
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In the electronics industry, where the Marubun Group is positioned, although demand for smartphones and tablet PCs grew on a global scale, the production of automobiles, PCs and digital cameras among other products declined because of the effects of the flooding in Thailand. In terms of capital spending, orders for machine tools rebounded, reflecting demand for reconstruction from the earthquake and the floods. However, orders for semiconductor manufacturing equipment declined. And in the semiconductor and electronic components markets, downward movements in prices of DRAM and LCD panels continued to accelerate.
In this environment, net sales of the Group during the consolidated first three quarters under review rose 8.6% from the same period of the previous year, to 174,393million yen. Consolidated operating income increased 2.2% year on year, to 1,605 million yen, while consolidated ordinary income rose 17.2% year on year, to 1,246 million yen attributable to a fall in foreign exchange losses. Consolidated net income increased 98.7% from the same period of the previous year, to 499 million yen, primarily reflecting the posting of 78 million yen in gain on sales of investment securities.
Operating results by business segment are as follows.
(Electronic Devices business)
In the Electronic Devices business, demand for LCD panels for TV sets and semiconductors for cellular phone modules declined, and sales of semiconductors for automobiles and digital cameras also dropped because of the effects of the earthquake and the floods. Meanwhile, a business involving the sale of Samsung electronic products, which was acquired by a subsidiary of the Company in July 2011, contributed to results, while sales of semiconductors and electronic components for PCs and smartphones also increased. As a result, net sales in this segment rose 11.0% year on year, to 154,169 million yen, while segment income slipped 15.1% year on year, to 1,210 million yen, reflecting a fall in the gross profit margin and a rise in selling, general and administrative expenses.
(Electronic Systems business)
In the Electronic Systems business, although sales of measurement and inspection equipment increased, reflecting needs for reconstruction from the earthquake and the floods, sales of thin-film equipment among scientific equipment declined significantly. Sales of artificial satellite components in space and defense electronics also decreased, while sales of medical equipment remained weak. As a result, net sales of this segment decreased 6.3% year on year, to 20,224 million yen, while segment income increased 143.6%, to 402 million yen, thanks to an improvement in the gross profit margin.
Although the electronics industry, where the Marubun Group is positioned, is expected to grow on the strength of expanding demand in emerging countries, structural change has become prominent as price competition in the market for finished goods gathers momentum, the transfer to overseas production or consignment of production to EMS and ODM companies expands, and business restructuring accelerates.
In this environment, the Group is taking steps to boost sales and strengthen its earnings capabilities by establishing a stable growth base through the expansion of sales of analog semiconductors and the strengthening of the wireless equipment business and the in-vehicle equipment business. We are also stepping up sales of high value-added products for growth markets such as the environment, medical care, and information security. The Group is also bolstering its global sales system by strengthening overseas design-in functions and customer support functions, while seeking to enhance its competitive edge through collaborative ventures and affiliations with other companies.
At the same time, the Group is striving to improve corporate quality by providing training for its people, who are the source of its growth, and strengthening its organization. We are also refining our systems of quality control and internal control.
We ask for your continued support, and we will welcome your suggestions.
Yours truly,
February 2011
Akihiko Inamura
Chief Executive Officer
Marubun Corporation
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Message from the CEO
