Fourth Quarter Financial Results Fiscal Year 2013 (Ended March 2014) April 30, 2014 Seiko Epson Corp. ©Seiko Epson Corporation 2014. All rights reserved. Disclaimer regarding forward-looking statements The foregoing statements regarding future results reflect the Company’s expectations based on information available at the time of announcement. The information contains certain forwardlooking statements that are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks and uncertainties include, but are not limited to, the competitive environment, market trends, general economic conditions, technological changes, exchange rate fluctuations and our ability to continue to timely introduce new products and services. Numerical values presented herein Numbers are rounded to the unit indicated. Percentages are rounded off to one decimal place. 1 FY2013 Full-Year Financial Results FY2014 Financial Outlook FY2013 FY2013 Q4 Financial Results Q4 Financial Results 2 Financial Highlights (Full Year) FY2012 (Billions of yen) Net sales 851.2 % - 1/31 Outlook 990.0 (Amount, %) % Actual % - 1,003.6 - Y/Y Vs. previous outlook +152.3 +13.6 +17.9% +1.4% Operating income 21.2 2.5% 79.0 8.0% 84.9 +5.9 +63.7 8.5% +299.8% +7.6% Ordinary income 17.6 2.1% 74.0 7.5% 78.1 +4.1 +60.4 7.8% +343.1% +5.6% -3.4 -0.4% 68.0 6.9% 71.9 7.2% +75.3 +3.9 - +5.8% -10.0 -1.2% 52.0 5.3% 83.6 8.3% +93.7 +31.6 - +61.0% Net income before income taxes Net income EPS Exchange rate 3 Actual Change FY2013 -¥56.41 ¥290.68 ¥467.87 USD ¥83.11 ¥100.00 ¥100.23 EUR ¥107.14 ¥134.00 ¥134.37 Previous outlook exchange rate assumptions from Q4 onward USD: ¥100.00, EUR: ¥140.00 FY2013 Financial Results By business segment (Billions of yen) 851.2 21.2 1,003.6 1,150.0 Net sales 140.0 0.1 9.7 Corporate Other 6.8 1.3 16.1 950.0 18.9 148.9 1.2 11.4 750.0 84.9 120.0 Net sales 140.7 +8.1 Operating income +1.0 80.0 550.0 0.2 8.6 121.5 836.4 20.0 685.8 0.0 150.0 -20.0 -7.0 4 Information Equipment Net sales -6.1 Net sales FY2012 FY2013 Actual Actual -40.0 +150.5 Operating income +69.7 40.0 -50.0 +152.3 Operating income +63.7 Devices & Precision Products 100.0 60.0 350.0 Consolidated total 51.7 Sensing & Industrial Solutions Net sales -9.6 -0.1 -10.1 -0.2 -29.6 -35.9 Operating income FY2012 Actual FY2013 Actual Operating income +4.7 -0.5 Corporate Net sale -12.1 Operating income -6.3 Net Sales Comparison (Full-Year) Information Equipment Segment (Billions of yen) 900.0 685.8 836.4 26.7 700.0 163.8 17.5 Y/Y 500.0 PRJ Other 647.4 100.0 -0.7 -1.5 +32.9 % sales FY12 FY13 89% 91% 11% 9% Printing Systems Y/Y 538.1 +9.1 Visual Communications Y/Y 130.8 300.0 PC, Other +109.2 % sales FY12 FY13 IJP 70% 72% PP 10% 8% BS 18% 18% SCN, other 2% 2% -100.0 FY2012 Actual 5 FY2013 Actual Eliminations IJP PP BS SCN PRJ Inkjet printer Page printer Business systems Scanner Projector Net Sales Comparison (Full-Year) Devices & Precision Products Segment (Billions of yen) 140.7 148.9 200.0 Precision Products 150.0 Y/Y 51.3 +10.0 61.4 100.0 Microdevices 50.0 0.0 93.3 -3.9 93.1 -5.6 Y/Y -0.1 % sales FY12 FY13 Quartz 65% 63% Semicon.35% 37% Eliminations, Other -50.0 6 FY2012 FY2013 Actual Actual FY2013 Summary Strategies pursued under our business plan have started to show up in the numbers, with some help from the weaker yen. Factors affecting operating income (Billions of yen) 21.2 21.4 84.9 42.2 Organic growth Foreign exchange effect FY2012 FY2013 Goals and results in the IJP business 7 Strengthen products to capture high print volume customers Improved model mix Expand sales of high-capacity ink tank models Increased ASPs Expand the commercial printer product lineup Sales of consumables trending up FY2014 Actions (1) SE15 Updated Mid-Range Business Plan (FY201315) Readjust the product mix & adopt new business models in existing business segments. IJPs for emerging markets & offices Ultra-short-throw lens & installation projectors Develop new business segments Commercial printers Sensing and industrial solutions segment Become a community of robust businesses with strong synergies Next midrange business plan (FY2016-18) 8 Become a company that once again posts strong growth by creating and providing new information tools and equipment for businesses and professionals, as well as consumers. Achieve 10% ROS and 10% or higher ROE on a continuous basis as early as possible. FY2014 Actions (2) FY2014 actions Stay on the course charted for the 2nd year of the business plan and remain focused on accelerating the planned strategic actions Avoiding the single-minded pursuit of net sales growth, generate steady income and put the company in a stronger financial position. Strategically invest as necessary to accelerate measures geared toward future growth while keeping fixed costs under control. 9 FY2014 Financial Outlook FY2013 (Billions of yen) Net sales Operating income Ordinary income Change Actual % Outlook % 1,003.6 - 1,010.0 - Amount % +6.3 +0.6% +2.4% 84.9 8.5% 87.0 8.6% +2.0 78.1 7.8% 88.0 8.7% +9.8 +12.6% Net income before income taxes 71.9 7.2% 84.0 8.3% +12.0 +16.8% Net income 83.6 8.3% 65.0 6.4% -18.6 -22.3% EPS Exchange rate 10 FY2014 ¥467.87 ¥363.35 USD ¥100.23 ¥100.00 EUR ¥134.37 ¥135.00 FY2014 Financial Outlook (Net Sales) By business segment 1,003.6 1,100.0 Other 6.8 16.1 1.3 950.0 1,010.0 148.9 4.0 19.0 1.0 145.0 (Billions of yen) Y/Y -2.8 Sensors & Industrial Solutions Y/Y 800.0 +2.8 Devices & Precision Products 650.0 Y/Y 500.0 836.4 480.0 Corporate 550.0 0.0 9.0 72.0 73.0 350.0 -3.9 850.0 250.0 450.0 Information Equipment 350.0 4.0 10.0 0.0 1.0 450.0 530.0 Y/Y +13.5 400.0 150.0 200.0 50.0 50.0 -9.0 -6.1 -100.0 Net sales FY2013 11 Actual FY2014 Outlook Eliminations -3.0 -50.0 -6.0 Half-yearly net sales FY2014 FY2014 H1 Outlook H2 Outlook Net Sales Outlook by Business Information Equipment Segment 900.0 836.4 26.7 700.0 163.8 850.0 17.0 171.0 500.0 (Billions of yen) Y/Y -9.7 Visual Communications Y/Y +7.1 PRJ Other % sales FY13 FY14 91% 91% 9% 9% Printing Systems 300.0 647.4 663.0 100.0 -1.5 -1.0 Net sales -100.0 FY2013 12 Actual FY2014 Outlook 400.0 PC, Other Y/Y +15.5 % sales FY13 FY14 IJP 72% 73% PP 8% 7% BS 18% 18% SCN, other 2% 2% 450.0 Inkjet printer Page printer Business systems Scanner Projector 9.0 400.0 8.0 350.0 84.0 87.0 300.0 250.0 200.0 355.0 150.0 308.0 100.0 50.0 0.0 Eliminations IJP PP BS SCN PRJ 450.0 -50.0 0.0 -1.0 Half-yearly net sales FY2014 H1 Outlook FY2014 H2 Outlook Progress of Inkjet Printer Business Office and high-capacity ink tank IJP model unit shipment trends Office IJP models (left) High-capacity ink tank IJP models (left) Total Epson inkjet unit shipments (right) (Million of shipments) 5 (Million of shipments) 4 13 3 11 2 9 1 7 0 5 FY2010 FY2011 FY2012 FY2013 FY2014 (E) FY2014(E) Significantly expanded high-capacity ink tank models Expanded and enhanced the office inkjet lineup 13 15 Net Sales Outlook by Business Devices & Precision Products Segment 200.0 148.9 145.0 (Billions of yen) Precision Products 150.0 Y/Y 61.4 73.0 72.0 32.0 31.0 25.0 43.0 44.0 0.0 -2.0 -3.0 100.0 75.0 +1.5 63.0 50.0 100.0 Microdevices 50.0 0.0 -50.0 93.1 -5.0 -5.6 Net sales FY2013 14 87.0 Actual FY2014 Outlook Y/Y -6.1 % sales FY13 FY14 Quartz 63% 61% Semicon.37% 39% Eliminations -25.0 Half-yearly net sales FY2014 FY2014 H1 Outlook H2 Outlook FY2014 Financial Outlook (Operating Income) By business segment 84.9 140.0 0.1 9.7 87.0 0.0 0.0 12.0 120.0 (Billions of yen) 26.0 Devices & Precision Products Y/Y 80.0 60.0 0.0 6.0 Information Equipment 80.0 121.5 124.0 Y/Y +2.4 40.0 40.0 Sensing & Industrial Solutions 20.0 Y/Y 0.0 Other -20.0 -40.0 -10.1 -0.2 -35.9 Actual 20.0 78.0 46.0 -0.8 -11.0 0.0 -5.0 0.0 -38.0 Operating income FY2013 15 0.0 6.0 +2.2 100.0 60.0 61.0 FY2014 Outlook Corporate -2.0 -21.0 -6.0 0.0 -17.0 -20.0 Half-yearly operating income FY2014 FY2014 H1 Outlook H2 Outlook FY2012 Full-Year Financial Results FY2013 Financial Outlook FY2013 Q4 Financial Results 16 Financial Highlights (Fourth Quarter) FY2012 (Billions of yen) Net sales Operating income Ordinary income 227.1 % - Q4 Actual 253.1 Change % - Amount % +25.9 +11.4% 9.4 4.2% 10.0 4.0% +0.5 5.5 2.4% 6.1 2.4% +0.6 +11.6% Net income -0.7 -0.3% 4.4 1.7% +5.2 ‐ Quarterly net income 2.5 1.1% 32.9 13.0% +30.4 ‐ before income taxes EPS Exchange rate 17 Q4 Actual FY2013 ¥14.10 ¥184.08 USD ¥92.42 ¥102.78 EUR ¥122.05 ¥140.79 Previous outlook exchange rate assumptions from Q4 onward USD: ¥100.00, EUR: ¥140.00 +6.2% Quarterly Net Sales Trend By business segment (Billions of yen) 227.1 Consolidated total 220.1 248.4 281.8 300.0 0.3 250.0 0.3 10.4 0.4 200.0 3.0 31.5 0.1 0.2 3.6 36.9 6.2 253.1 0.1 3.6 38.2 3.3 39.7 Other 0.4 0.3 5.5 33.9 Y/Y +25.9 Corporate Y/Y -10.1 Sensing & Industrial Solutions Y/Y 150.0 241.0 100.0 182.8 180.5 214.5 200.2 Devices & Precision Products Y/Y +2.4 Information Equipment 50.0 Y/Y 0.0 +2.5 -1.2 -1.3 -1.5 -1.5 +31.6 -1.6 Eliminations -50.0 2012/Q4 18 2013/Q1 2013/Q2 2013/Q3 2013/Q4 Quarterly Net Sales Comparison Information Equipment Segment (Billions of yen) 182.8 214.5 240.0 PC, Other Y/Y +4.2 220.0 9.9 200.0 180.0 5.7 160.0 34.9 43.0 Y/Y 120.0 100.0 Printing Systems 80.0 142.4 161.8 60.0 40.0 20.0 0.0 -0.2 -0.4 2012/Q4 2013/Q4 -20.0 Y/Y • PRJ: Unit shipments up in all regions, esp. the Americas +8.1 % sales ’12/Q4 ’13/Q4 PRJ 89% 91% Other 11% 9% 140.0 19 Visual Communications +19.4 % sales ’12/Q4 ’13/Q4 IJP 70% 70% PP 10% 9% BS 18% 18% SCN, other 2% 3% Eliminations • • • IJP: Printer net sales up on improved model mix, higher unit volume and higher ASPs; consumables net sales up PP: Net sales down on lower printer unit shipments BS: SIDM volume down, but net sales up on POS product volume growth IJP PP BS SIDM POS SCN PRJ Inkjet printer Page printer Business systems Serial impact dot matrix printer Point of sales Scanner Projector Quarterly Net Sales Comparison Devices & Precision Products Segment (Billions of yen) 31.5 33.9 50.0 Precision Products Y/Y 30.0 11.3 +2.0 13.3 • Microdevices Y/Y 10.0 21.0 22.0 -0.7 -1.4 +0.9 % sales ’12/Q4 ’13/Q4 Quartz 65% 62% Semicon. 35% 38% Eliminations, Other -10.0 20 2012/Q4 2013/Q4 • Watches: Steady growth Quartz: Net sales flat after price erosion, unit shipment growth & foreign exchange effects. Semiconductors: Up on higher silicon foundry orders & driver shipments, etc. Quarterly Selling, General and Administrative Expenses (Billions of yen) 80.0 58.7 25.8% 53.5 55.8 63.1 65.3 25.8% Other 24.3% 70.0 22.5% (% sales) 22.4% Y/Y +1.8 60.0 50.0 29.0 27.8 25.9 40.0 30.0 29.7 26.2 Y/Y 5.0 5.4 6.7 3.6 5.2 2.5 3.9 3.0 4.5 5.4 21.9 21.0 21.8 23.6 23.4 2012/Q4 21 2013/Q1 2013/Q2 2013/Q3 2013/Q4 +1.5 Salaries & Wages Y/Y 0.0 +1.7 Sales Promotions Y/Y 20.0 10.0 Advertising +1.5 Quarterly Operating Income Trend By business segment (Billions of yen) 9.4 8.0 26.0 40.8 10.0 52.0 50.0 Information Equipment 40.0 Y/Y 29.7 30.0 23.8 Devices & Precision Products Y/Y 20.0 +10.0 -1.0 15.8 13.7 Sensing & Industrial Solutions 10.0 4.0 3.7 0.7 2.3 Y/Y 0.0 -2.1 -2.2 -2.7 -2.7 -0.3 -2.5 -0.2 * "Other" segment not shown -10.0 -2.8 -9.6 -4.7 -10.6 -10.9 2013/Q3 2013/Q4 -20.0 2012/Q4 22 2013/Q1 2013/Q2 Corporate -8.1 Operating Income Fluctuation Cause Analysis (Billions of yen) +7.0 Price fluctuations Cost fluctuations -1.1 S.G.A. increase -1.5 +5.1 Others* -2.9 Changes in sales volume 10.0 9.4 -6.1 Impact of exchange rate fluctuations 0 Operating income 2012/Q4 ¥0.5 billion increase Operating income 2013/Q4 *The corporate and other segments in this comparison include products and businesses that cannot be compared directly with similar items in the previous year. 23 Statistics of Balance Sheet Items Total assets 1,000.0 500.0 870.0 798.2 740.7 778.5 865.8 End of March 2010 End of March 2011 End of March 2012 End of March 2013 End of March 2014 0.0 (Billions of yen) Inventories 200.0 100.0 151.1 151.9 162.2 163.5 183.6 End of March 2010 End of March 2011 End of March 2012 End of March 2013 End of March 2014 0.0 24 Statistics of Balance Sheet Items Interest-bearing liabilities and ratio of interest-bearing liabilities 35.8% 400.0 200.0 34.1% 32.4% 34.9% 25.5% 311.6 272.1 239.8 271.8 220.7 End of March 2010 End of March 2011 End of March 2012 End of March 2013 End of March 2014 0.0 (Billions of yen) Shareholder's equity and equity ratio 400.0 200.0 32.3% 33.7% 33.3% 33.0% 281.2 269.2 246.4 256.7 End of March 2010 End of March 2011 End of March 2012 End of March 2013 40.3% 349.3 0.0 25 End of March 2014 *Lease obligations are included in interest-bearing liabilities *Shareholder equity = total net assets - minority interests in subsidiaries Outlook for Capital Expenditure and Depreciation and Amortization Expenses (Billions of yen) Capital expenditures Depreciation and amorization 55.0 50.0 41.1 31.8 38.9 37.6 43.1 39.3 44.0 37.8 38.7 0.0 FY2010 FY2011 Breakdown by segment Information Equipment FY2013 Actual FY2013 Actual Cap. Ex. FY2014 D&A Outlook FY2014 Outlook Cap. Ex. D&A 26.8 8.0 25.6 7.8 38.0 10.0 30.0 8.0 Sensing & Industrial Solutions 0.8 0.7 2.0 1.0 Other/Corporate 2.0 4.5 5.0 5.0 Devices & Precision Products 26 FY2012 Free Cash Flow Outlook (Billions of yen) Cash flow from operating activities Cash flow from investing activities Free cash flow 111.2 112.0 100.0 71.7 55.0 42.9 32.3 26.6 8.7 3.4 0.0 -4.8 -23.6 -31.5 -39.5 -39.5 -57.0 -100.0 FY2010 27 FY2011 FY2012 FY2013 FY2014 Actual Outlook Main Management Indicators (%) 30.0 27.6 20.0 17.1 10.0 3.7 0.0 3.7 3.4 3.5 2.0 9.5 10.1 8.5 8.6 2.5 2.8 2.3 -4.0 ROA: Ordinary income/total assets (avg. balance) ROS: Operating income/net sales ROE: Net income/shareholders' equity (avg. balance) -10.0 FY2010 28 FY2011 FY2012 FY2013 FY2014 Actual Outlook IFRS Financial Outlook for FY2014 Epson to apply IFRS from FY2014 IFRS-based financial results to be presented from Q1 J-GAAP Net sales Full-Year Outlook % 1,010.0 - Revenue 8.6% 8.7% 8.3% Business profit* Net income before income taxes 87.0 88.0 84.0 Net income 65.0 6.4% Profit Operating income Ordinary income EPS Exchange rate 29 IFRS FY2014 ¥363.35 USD EUR ¥100.00 ¥135.00 Operating profit Profit before taxes EPS Exchange rate FY2014 Full-Year Outlook % 1,010.0 - 85.0 104.0 103.0 8.4% 10.3% 10.2% 80.0 7.9% ¥447.20 USD ¥100.00 EUR ¥135.00 * Business profit is not defined by IFRS. However, Epson will use business profit (= revenue - cost of sales - selling, general and administrative expenses) as a measure to gauge the financial performance of its businesses and will also present this information to users of Epson's financial statements, as the Company believes it will prove useful for evaluating Epson's financial performance. Changes to Profit and Loss Statement Accompanying IFRS Implementation J-GAAP (Statement of Operations) IFRS (Statement of Comprehensive Income) Net sales Revenue -) Cost of sales - ) Cost of sales Gross profit Gross profit -) Selling, general and administrative expenses (SGA) - ) Selling, general and administrative expenses (SGA) Business profit * Revenue, excluding cost of sales and SGA expenses +) Other operating income - ) Other operating expenses Operating income +) Non-operating income Interest and dividends income Financial profit Operating profit +) Financial profit Other income -) Other expenses Interest expenses Financial costs - ) Financial costs Other expenses +) Extraordinary income Other non ‐operating income (loss) Extraordinary income - ) Extraordinary losses (loss) Ordinary income Income before income taxes and minority interests - ) Income taxes ±)Other comprehensive income Comprehensive income 30 Profit before taxes - ) Income tax expenses ±) Minority interests Net income ±) Investment profit and losses from equity method Profit from continuing operations Prior service cost of retirement benefit costs Profit from discontinued operations Profit ±)Other comprehensive income Comprehensive income We have inserted this slide to explain Epson’s change from J-GAAP to IFRS. The terms used may vary from those appearing in the financial statements (IFRS) to be disclosed from the first quarter of FY2014 onwards.
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