February 21, 2012,08:48 +0900(JST) Business Results for the Third Quarter of FY 2011
On January 31, we announced Sumitomo Electric’s business results for the third quarter of FY 2011. During the period, we suffered production slowdowns due to supply chain disruptions in the first quarter, but in the second quarter, demand picked up sharply to make up for the loss of supplies during the disaster, and then the flooding occurred in Thailand in the third quarter. We were tossed about by natural disasters like a roller coaster ride, which made our business operations very difficult.
For the cumulative third quarter of the current fiscal year, our sales were almost the same as the previous year’s figure at 1,461.8 billion yen, while we reported significant year-on-year decreases in income, due mainly to the devastating impact of the Great East Japan Earthquake and Tsunami in the first half of this fiscal year. Our operating income stood at 46.2 billion yen, ordinary income at 62.8 billion yen, and net income at 37 billion yen.
In terms of the third quarter (October to December), however, we recorded an increase in both sales and income compared with the same period last year. Net sales increased 4% year-on-year to 505 billion yen, and operating income rose 2% to 22.4 billion yen. This was attributed to an increase in the global market share for automotive-related products that was achieved despite the impact of the severe flooding in Thailand.
Looking at the current situation in the world, the negative impact of the European credit crisis, a major destabilizing factor in 2012, is gradually undermining the global economy. We should also keep an eye on the tense situation in oil-producing Iran.
Domestically, Japan is saddled with a mountain of important political issues, such as integrated reform of the social security and tax systems, raising of the consumption tax, the U.S. military base relocation issue in Okinawa, and the Trans-Pacific Partnership (TPP) issue. In addition, Japanese industry faces a very difficult business environment, shackled by the so-called six burdens, including uncertainty over electricity supply and the strong yen.
Although the business environment surrounding us is very severe, we should do our sincere best for the remaining two months of the fourth quarter to attain the estimates officially announced at the beginning of the fiscal year. We will strive to increase our sales and income by taking all possible measures: capturing demand from post-disaster restoration to the fullest; accelerating measures to cope with the sharp rise in the yen, such as local procurement of parts and materials for overseas production and shifting of production facilities to optimal locations at the global level; and thoroughly reducing all costs.
With 2012 being the final year of VISION 2012, and a year leading to the next mid-term business plan, VISION 2017, fiscal 2012 will be an important year for the Sumitomo Electric Group. Everyone at Sumitomo Electric will keep trying their very best in pursuing their duties and roles, acting as the driving force behind the Group’s growth instead of being just cogs in the machine, keeping in mind the three requests I made to them at the beginning of this year: “to start the final spurt toward the goals of VISION 2012,” “to improve your ability to deal with change,” and “to believe in your dreams and stay cheerful, energetic and happy.”