The global economy during the first half of FY2012, the six-month period from April 1 through September 30, 2012, remained in a decelerating trend, with the impact of debt crisis in Europe, weak U.S. economy, and sluggish exports from China and other Asian countries to Europe and the U.S.
It has become apparent that economy in Japan is also on a decelerating trend, with its weak export and production affected by the global economic slowdown, and a small impact of reconstruction demand following the Great East Japan Earthquake.
The market conditions surrounding Nippon Chemi-Con Group remained severe, with weak demand for digital appliances, PCs and other consumer electronics devices and delay in recovery in industrial equipment and energy field.
In this business environment, Nippon Chemi-Con Group worked on drastic reform of cost structure led by Cost Structural Reform Task Force set up this January, and at the same time focused on sales expansion within our strategic markets including automotive electronics market, industrial use inverter market, new energy market, home appliances market, and ICT market.
As for product development, we developed conductive polymer hybrid aluminum electrolytic capacitors possessing advantages of both aluminum electrolytic capacitors and conductive polymer aluminum solid capacitors, and also resin molded type conductive polymer aluminum solid capacitors with reduced height. We also launched new products optimized for each application such as aluminum electrolytic capacitors with 10 times the longer life for LED lighting applications.
To enhance overseas business, we opened our first overseas product R&D office, Chemi-Con Technical Center (Wuxi) Ltd. in China this June to strengthen product development that meets local needs.
However, business environment worsened than expected due to weak demand and fiercer competition with the emergence of Chinese and Taiwanese competitors.
As a consequence, consolidated financial results for the sixth months ended September 30, 2012 recorded net sales of 45.246 billion yen (a decrease of 20.5% year on year), operating loss of 4.017 billion yen (operating income of 2.088 billion yen in the same period of the previous year), ordinary loss of 5.141 billion yen (ordinary income of 1.231 billion yen in the same period of the previous year), and net loss of 5.714 billion yen (net loss of 789 million yen in the same period of the previous year).
In view of the situation, Nippon Chemi-Con deeply regrets that it has decided to pay no interim dividend. Your understanding and continued support will be much appreciated.
The following presents a breakdown of sales by segment.
Business environment is expected to remain severe with the decelerating economic trend both in Japan and overseas.
In view of this situation, Nippon Chemi-Con Group will embark on “structural reform” to strengthen our business structure by lowering our break-even point through reduction of fixed costs, and to ensure profit based on the growth strategy with new products.
The goal of the reform is to “reform the business structure to turn profit at 90 billion yen sales amount.” In particular, we will eliminate and consolidate production facilities, reduce labor cost, freeze capital spending in principle, reduce inventories, concentrate in core competence, and speed up new product development.
Although we cannot avoid scaling down some of our businesses and personnel downsizing, we will capture the markets in the growing sectors by aggressively promoting development and sales of new products. We will further enhance electric double layer capacitors business which started full-scale supply for automotive applications, and expand sales of low profile capacitors, conductive polymer hybrid aluminum electrolytic capacitors and other new products. We will also continue development of high performance electrode materials to be used for next generation capacitors and lithium ion batteries and consider commercialization at an early date.
We will implement structural reform as early as possible and steadily reform our business structure to become profitable.
For consolidated results forecast for FY2012 ending March 31, 2013, we forecast net sales of 93 billion yen (decrease of 7.3% year on year), operating loss of 6.8 billion yen (operating loss of 2.596 billion yen in the previous year), ordinary loss of 8.0 billion yen (ordinary loss of 2.633 billion yen in the previous year), and net loss of 9.7 billion yen (net loss of 4.909 billion yen in the previous year), based on the exchange rate of 78 yen against the U.S. dollar.
Ikuo Uchiyama, President