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President's Message

To Our Shareholders

On behalf of the Sumitomo Electric Group, I would like to express our sincere appreciation for your daily, generous support of us.
I would like to report on our group’s business results for FY 2017.

Osamu Inoue President & COO

Business Results for FY 2017

In this fiscal year the global economy showed stable growth on the whole, as indicated by, for example, expansionary trends continuing in the U.S. and signs of recovery in Europe and China. The Japanese economy also continued to show a moderate recovery due to an increase in exports and capital expenditure. Owing to such factors as the effects of U.S. economic policy and geopolitical risks, however, the outlook continues to be unpredictable.

Regarding the business environment for the Sumitomo Electric Group, because of an increase in production of automobiles by carmakers, mainly overseas, the demand for wiring harnesses, powder alloys, and sintered components showed steady growth, and the demand for infocommunications products, such as optical fiber cables, also grew. In this environment, the consolidated financial settlement for FY 2017 saw revenue increase from the previous fiscal year, as net sales amounted to 3,082,247 million yen (previous fiscal year: 2,814,483 million yen, up 9.5%). As for profit, due to such factors as the achievement of cost reductions for flexible printed circuits (FPCs) for mobile devices, in addition to an increase in demand, operating income was 173,139 million yen (previous fiscal year: 150,503 million yen, up 15.0%), ordinary income was 195,010 million yen (previous fiscal year: 173,872 million yen, up 12.2%), and profit attributable to owners of the parent was 120,328 million yen (previous fiscal year: 107,562 million yen, up 11.9%), with each of them showing a year-on-year increase.

As for the year-end dividend, in consideration of the business results for FY 2017 and other matters, we have distributed an amount of 25 yen per share, which is 2 yen year-end dividend per share more than that of the previous fiscal year. As a result, the dividend for FY 2017, including the interim dividend (21 yen), is 46 yen per share, which is 6 yen per share more than that of the previous fiscal year.

Issues to Be Tackled

The global economy as a whole is expected to continue its moderate recovery in the future. For the Japanese economy, it is also expected that present recovery trends will continue through improvement of the environment for employment and incomes. However, the risk of an economic downturn persists due to various factors such as the uncertainty concerning U.S. trade policy and financial policy, uncertainty concerning emerging economies, and an increase in geopolitical risks. The outlook is, therefore, expected to remain unclear.

In these circumstances, we will continue to operate based on the Sumitomo Spirit and the Sumitomo Electric Group Corporate Principles, and strive for further evolution of SEQCDD (safety, environment, quality, cost, delivery, and development & research). We will accelerate efforts particularly for further reinforcement of the corporate structure, globalization, and prompt commercialization of products, and devote ourselves to the realization of “VISION 2022,” the medium-term management plan launched in FY 2018, by marshalling all of the forces of the Sumitomo Electric Group. To this end, we will pursue the following strategies in each of our business segments.

In the automotive segment, striving to become a mega supplier with wiring harnesses as its core, we will accelerate the development and marketing of high-voltage wiring harnesses and battery-related products designed for electric vehicles, high-strength aluminum wiring harnesses that are light and excel in durability, and electronic components and connectors for high-speed communication corresponding to electronic control of automobiles. In addition, aiming to expand our market share for overseas customers, we will strengthen our product development capabilities through reinforcement of cooperation within the Sumitomo Electric Group and collaboration with other companies, in anticipation of popularization of electric vehicles, automated driving, and connected cars, and work to further expand our business. Sumitomo Riko Company Ltd. will endeavor to extend its marketing efforts by taking advantage of sales and development bases that extend globally in the field of automotive anti-vibration rubbers and hoses, and also work on developing new products for next-generation vehicles.

In the infocommunications segment, we will continue to capture global demand for optical fiber cables, 100 Gbps high-speed optical devices, and Gallium Nitride (GaN) devices for mobile phone base stations. We will also proceed further with the marketing of ultra-low loss optical fibers for submarine cables and ultra-high-fiber-count optical fiber cables for data centers. In addition, we will focus on responding to the increase in demand for optical fibers and next-generation optical/electronic devices, in line with an increase in communication data volume as a result of the development of a fifth-generation mobile communications system, expansion of video streaming services and cloud services.

In the electronics segment, with regard to FPCs for mobile devices, we will continue to focus on global marketing, in addition to thorough quality improvement and cost reductions. Furthermore, by taking advantage of the integrated capabilities of the Sumitomo Electric Group, we will work to ensure the launch of new products that are ultrathin, highly precise and highly heat resistant, and to expand our business in the automotive and other markets. Moreover, with regard to electronic wires and irradiation tubes, we will accelerate the reinforcement of global production and marketing.

In the environment and energy segment, we will strengthen the manufacturing of power cables, and further proceed with cost reductions and quality improvement. We will also endeavor to improve profitability by winning orders for both domestic and international large-scale power cable projects and capturing some of the increased demand related to the renewal of outdated facilities. In addition, we will continue to expand our marketing of flat magnet wires for motors used in electric vehicles, and also focus on expanding business related to renewable energy and smart grids, while taking advantage of the integrated capabilities of the Sumitomo Electric Group, including Nissin Electric Co., Ltd. and Sumitomo Densetsu Co., Ltd.

In the industrial materials segment, with regard to cemented carbide tools, we will strive, more than ever before, to capture domestic and international demand by increasing production capacity. In addition, we will strengthen our development and marketing of new products for the machining of difficult-to-cut materials for not only the main automotive field but also the fields of aircraft and energy. We will also work to further strengthen the domestic and international supply of sintered components, and focus on expansion of the global production and marketing of prestressing steel strands and precision spring steel wires.

In research and development activities, we will make efforts to create new businesses and products that are original and excel in profitability. This includes the acceleration of developing redox flow batteries, concentrator photovoltaic systems, and Power Line Communication applications, with the aim of establishing a new electricity/energy infrastructure, and the commercialization of superconducting products, magnesium alloy products, water-treatment systems, devices for next-generation communication network, and large-capacity data transmission cables. Taking a long-term perspective, we will leverage the Group’s strengths to develop new products in response to society’s needs, including advanced traffic safety systems and searching for new materials with new functions.

Ultimately, we believe that compliance with laws and regulations and maintaining corporate ethics constitute the foundation of the Company’s management, and that they are the absolute basis to continue and develop as a corporation. In particularly, we consider compliance with competition laws as our most important task, and since the establishment of a set of rules and regulations to ensure compliance with competition laws in June 2010, we have worked to strengthen our competition law compliance as an entire group. From now on, under the principles of the Sumitomo Spirit, which values doing your sincere best, not only in business but also in every aspect of your life, placing importance on integrity and not acting rashly or carelessly in pursuit of easy gains., we will make all efforts to ensure that all corporate activities are conducted fairly and honestly and can be trusted by society.

We would like to ask our shareholders for your continued support and understanding.

June 2018

Osamu Inoue President & CEO

Osamu Inoue
President & COO


Osamu Inoue writes about various daily events and happenings on his blog. To view the blog, click here: "President's Blog"
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