I would like to begin by taking this opportunity to convey my sincere gratitude to our shareholders and investors for the continuing support you have shown us over the years. It is my pleasure to present our consolidated results for the first half of the year ending March 31, 2012 (6 months from April 1, 2011 to September 30, 2011).
Overall results
During the first half under review, although the global economy benefited from economic growth in emerging countries, economies in Europe and the United States remained uncertain, reflecting financial unrest. In Japan, the economy struggled with the effects of the East Japan Earthquake at the beginning of the period, but showed signs of picking up as supply chains were restored. However, given persistent concerns such as electric power shortages and radiation problems related to the accident at the Nuclear Power Plant, as well as the further appreciation of the yen, the economic outlook appeared increasingly uncertain.
Although the Hoya Group responded to the rise in orders that accompanied the recovering market conditions, despite the uncertain conditions described above, net sales were heavily influenced by falling unit prices and the stronger yen.
As a result, consolidated revenue from continuing operations for the first half under review declined slightly, falling 0.2% year on year, to ¥189,669 million. Profit before tax from continuing operations was ¥33,241 million, down 5.1% year on year, and profit for the term from continuing operations was ¥27,172 million, down 1.3%.
Profit for the term of the Group including discontinued operations declined 26.1% year on year, to ¥27,929 million. The main reason for the change was the posting of a ¥10,343 million gain on the transfer of business as an income from discontinued operations during the same period previous year due to the transfer of the HDD glass media manufacturing business and related assets to Western Digital Corporation, a HDD manufacturing company in the United States, in addition to income and losses from the media business.
Profit per share for the term was ¥64.52. Consequently, we have decided to set the interim dividend per share at ¥30 (the consolidated payout ratio was 46.5%).
Results by business
In the Information Technology segment, net sales from continuing operations declined 5.2% year on year, to ¥84,157 million, and the segment profit fell 15.2% year on year, to ¥18,779 million.
In electronics related products, growth in the overall market was sluggish amid uncertain economic conditions, although the markets for products related to semiconductors and liquid crystal display (LCD) showed some growth, especially in emerging countries. As a result, sales growth was modest, reflecting the effect of the stronger yen and a continued fall in unit prices, although we were able to achieve solid shipments, particularly of advanced and high-precision products.
Meanwhile, in HDD glass disks (substrates), although the shipment volume increased year on year, thanks to the expansion of market share, sales declined because of the effect of the stronger yen.
In imaging-related products, sales of lenses for digital cameras increased as shipments of lenses for compact cameras, which had struggled as a result of the earthquake, recovered in the latter three months of the period. Shipments of products used for single-lens reflex cameras and interchangeable lenses also remained firm.
With respect to the PENTAX Imaging System business, centering on digital cameras in the PENTAX brand as finished products, both Hoya and Ricoh Co., Ltd. (“Ricoh”) agreed to transfer the business to Ricoh and entered into a transfer agreement on July 1, 2011. As a result, the business was classified as a discontinued operation in the first half under review. On October 1, 2011, the business was transferred to Ricoh as planned.
In the Life Care segment, revenue from continuing operations increased 4.1% year on year, to ¥104,679 million, and the segment profit rose 12.5%, to ¥21,418 million.
In healthcare related products, the shipment volume of eyeglass lenses increased from a year earlier and, in particular, rose sharply in Europe, the largest market for the Company. Thanks in part to the depreciation of the yen against the euro in the first quarter compared to a year earlier, sales in this business grew.
Sales of contact lenses rose year on year as the sales volume expanded, reflecting an increase in the number of customers visiting directly owned stores, higher sales of high value-added products, and an increase in the number of stores undertaking aggressive expansion initiatives.
In medical-related products, although the medical equipment market remained weak in Europe, reflecting fiscal unrest, demand picked up in the medical endoscope market in the United States, despite the weak economy. As emerging markets remained firm, sales increased with the overall shipment volume rising on a year-on-year basis. Sales of intraocular lenses (IOL) rose from a year earlier, thanks to brisk sales of soft lenses.
Outlook
In the second half of the current fiscal year, although operations are generally expected to remain healthy, there are concerns that some businesses may face downside risks, such as the shutdown of operations at our plants and production adjustment at customers due to the flooding in Thailand, the sluggish economy in Europe, and the prolonged appreciation of the yen. In these circumstances, the Information Technology segment will seek to maintain its competitiveness by providing high quality products with leading-edge technologies, while the Life Care segment will pursue initiatives to expand its business by accurately responding to market needs and bolstering sales channels and personnel. At the same time, we will also focus on maximizing operational efficiency by reducing costs across the Group on an ongoing basis, responding to the difficult operating environment and aiming to increase income steadily.
I respectfully ask for your continued understanding and support in the years to come.
