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Management Information

President's Message

Overview of the Year Ended March 2018

The global economy during the fiscal year ended March 31, 2018 saw mild economic growth supported by firm capital investments in the U.S.A. The European economy also trended towards recovery. The Chinese economy has maintained a stable growth rate thanks to growth in export amounts. The Japanese economy continued on a mild recovery trend thanks to a steady hiring environment and improved personal spending.

Looking at market environments impacting the Nippon Chemi-Con Group, automobile-related markets saw firm growth thanks to advances in the adoption of Advanced Driving Assistant Systems (ADAS). Industrial robots, other equipment-related markets and air conditioner market also trended favorably thanks to demand growth in China.

Amid such an environment, in April 2017 our Group launched our 8th Medium-term Management Plan, which outlines "Offering Services that Delight Our Customers and Creating New Values that Satisfy Genuine Demands of Customers" as fundamental strategy for this plan period. Through this plan, we have implemented policies aimed at increasing our corporate value. Specifically, we positioned five markets, including the automotive electronics market and industrial-use inverter market, both of which are expected to experience market growth, as strategic markets. Our manufacturing department, sales department, and technology department united as one to inject new products into these markets and conduct various sales and promotional activities. To address quality, we build a quality control structure focused on the prevention of quality problems, and to strengthen our quality control structure, we established a new Innovative Quality Advancement Dept. within the Quality Assurance Headquarters. We also made proactive quality investments, including installing the latest analytical equipment and measurement instruments. To increase our cost competitiveness by reorganizing our production structure, on April 1, 2017, we merged consolidated subsidiary Chemi-Con Fukushima Corp. with Fukushima Electrolytic Industry Corp. and merged Chemi-Con Yamagata Corp. with Chemi-Con Yonezawa Corp.

In the area of product development, we developed the MZS Series, a product line of surface mount-type aluminum electrolytic capacitors that serve as backup power sources for car navigation systems and car audio, and which offer up to 40% higher capacitance compared to previous products. We enhanced our product line by developing new models for the LXS Series and KMS Series of snap-in type aluminum electrolytic capacitors, which are expanding sales for use in solar power generator power conditioners and industrial-use machinery such as industrial robots. These new models feature a rated voltage of 600V for use as power sources in medical devices.

As a result, consolidated earnings for the year ended March 31, 2018 were net sales of 133,362 million yen (up 14.7% YoY), operating income of 5,818 million yen (up 74.3% YoY), and ordinary income of 4,416 million yen (up 120.5% YoY). Furthermore, losses attributable to owners of parent were 16,056 million yen (previous fiscal year was profit attributable to owners of parent of 840 million yen) on having recorded extraordinary losses related to Antitrust laws.

Furthermore, we have set a year-end dividend for the year ended March 31, 2018 of 30 yen per share.

Status by Division

The following presents a breakdown of sales by business division.

  1. Capacitors (120,596 million yen, 90.4% of total sales)
    In China and the Asia region, demand related to home appliances and automobile-related products increased, resulting in division net sales increasing by 14.6% YoY.
  2. Mechanical Parts and Other Parts (3,208 million yen, 2.4% of total sales)
    Division net sales increased 15.1% YoY thanks to increased CMOS camera module sales.
  3. Capacitor Materials (7,125 million yen, 5.4% of total sales)
    Division net sales increased 12.5% YoY thanks to increased demand for electrode foils for aluminum electrolytic capacitors.
  4. Other Products (2,431 million yen, 1.8% of total sales)
    Division net sales increased 24.8% YoY thanks to increased sales of resale products.

Outlook for FYE March 2019

Looking at earnings forecasts, while the U.S. economy is expected to trend towards mild growth thanks to firm capital investments and personal spending, there is concern of economic lull in Europe due to uncertainty caused by Brexit and other issues. Looking at the Japanese economy, the operating environment impact on our Group continues to require caution due to causes for concern such as a trend towards yen appreciation and rising costs for crude oil and raw materials.

Our Group fundamental strategy for FY2018, the second year of our 8th Medium-term Management Plan, is to "Proactively implement new reforms, viewing the 4th industrial revolution as a growth opportunity-Generating profits by effective use of management resources (people, things, money and information)". With this refined growth strategy, we will continue implementing measures aimed at solidifying our management platform. During FY2018, we will continue to proactively invest in growth sectors, focus on investment profitability, and improve our investment efficiency and our total asset turnover rate. We will increase sales by focusing on growth in the automobile and industrial equipment sectors, which are expected to see continued sales growth for aluminum electrolytic capacitors, our mainstay product. We will improve the profitability of products such as multi-layer ceramic capacitors and electric double-layer capacitors by identifying core products for promotion in each region. As part of our strategy for "Reinforcement of Earnings Structure", we will increase our rate of overseas production by providing production and quality support to overseas production plants to increase competitiveness.

Our full-year consolidated earnings forecast for Fiscal Year Ending March 2019 is net sales of 140,000 million yen (up 5.0% YoY), operating income of 7,500 million yen (up 28.9% YoY), ordinary income of 7,000 million yen (up 58.5% YoY), and profit attributable to owners of parent of 5,500 million yen (previous fiscal year resulted in losses attributable to owners of parent of 16,056 million yen). Furthermore, our currency rate assumption is 105 yen/1 USD.

June 2018
Ikuo Uchiyama, President