29 November 2019

IR Briefing

Upon settlement of the accounts for the first half of fiscal 2019, the IR briefing was held on November 13.

First, as we announced earlier, our consolidated business results for the first half of fiscal 2019 were: 1.524 trillion yen for net sales, 46 billion yen for operating income, 48 billion yen for ordinary income, and 28 billion yen for profit attributable to owners of the parent, all below the figures for the previous period. This resulted in our revising the full-year forecast downward.

I would like to omit a detailed explanation here, but basically, these results are mainly due to the slowdown in the overseas economy, affected by US-China trade conflicts and other factors, which inhibited the growth in our net sales, while our cost reduction efforts could not cover the declining prices, rising research & development costs for the future, the strong yen, and other cost increases. I apologize to our stakeholders for having to report such severe results. We will make our utmost efforts to improve our performance for the second half and beyond.

At the IR briefing, I received many questions. More than half of them were questions relevant to the automobile-related business segment, which I felt was more than usual. Of course it is natural because businesses in this field account for over half of our sales/profits, while these questions demonstrate that our stakeholders are highly interested in the future development of these businesses, including responses to CASE (connected, autonomous, shared & services, and electric). I am sorry that I cannot mention specific products at this stage, but we are proactively advancing R&D on technologies related to the high-speed communication required for automated driving and perimeter monitoring, and energy technologies necessary for high-voltage, large-current electricity for electric vehicles (EVs), with the aim of satisfying the expectations of our stakeholders, including customers.

For EVs, we have implemented capital investment to increase the production volume of rectangular magnet wires used in drive motors for hybrid vehicles, tab leads used for lithium-ion batteries, high-voltage harnesses, underfloor pipe harnesses, and the like. These are the product groups that are likely to experience further expansion.

Meanwhile, as infrastructure for the introduction of 5G (5th generation) mobile communication systems is being established, sales of our gallium nitride (GaN) devices, which can contribute to making mobile phone base stations smaller and more power efficient, are steadily growing. The infrastructure will be established first for base stations, to be followed by the development of high-speed, large-capacity optical fiber cables. I am sure that our high-level information and communication technologies will be useful for these advancements.

Despite the severe financial results, businesses with potential have been gradually expanding. By determining where we must take aggressive action and where we must be defensive, we aim to achieve steady growth.