Establishing a Strong Business Position by Strengthening Core Businesses and Restructuring Unprofitable Businesses
Results in First Half of Fiscal 2017 and Full-Year Forecasts
In the first half of fiscal 2017, Casio recorded net sales of ¥156.7 billion and operating income of ¥13.4 billion, with both sales and income down year-on-year. The biggest factor was the influence of sharp currency fluctuations. Additional factors were delays in component and materials procurement due to the Kumamoto Earthquake in April 2016, and production adjustments and sales restrictions related to structural changes to improve the profitability of the System Equipment business.
For the second half of fiscal 2017, we expect net sales to decline even more than originally forecasted, due to economic slowdowns in China and emerging economies, which are important markets for Casio. Added to the fact that we will be implementing significant structural changes to the System Equipment business and delays in launching new businesses, it will be difficult to achieve the forecast that we announced in August 2016.
Accordingly, we have made a downward revision to the full-year forecast, to net sales of ¥330 billion and operating income of ¥30.5 billion
Critical Strategies in the Second Half of Fiscal 2017 Looking Toward the Future
In the second half of fiscal 2017, Casio will work to strengthen the foundations of its businesses, in order to realize growth in fiscal 2018 and beyond.
In the timepiece business, Casio is generating strong sales on a local currency basis. We will pursue strategies to expand the timepiece business by leveraging our strengths to meet the target of ¥200 billion in net sales and ¥50 billion in operating income in fiscal 2019.
For Casio’s unique G-SHOCK brand, we will increase unit prices by delivering higher-priced models that incorporate traditional Japanese craftsmanship. For the analog market, which comprises 95% of the timepiece market, we will globally market high-performance analog watches that leverage digital technologies. Specifically, we will achieve differentiation through features that deliver accurate time anywhere in the world, using radio waves, GPS, and smartphone linking. We will also focus on the Chinese market and women’s market, which offer great potential for growth.
In the education products business, we will aim to achieve ¥150 billion in net sales and ¥15 billion in operating income in fiscal 2019, focusing on scientific calculators that are generating strong net sales on a local currency basis. To achieve these targets, we will expand the student market, establish new education markets for businesspersons, and increase sales of electronic instruments.
The student market tends to be insulated from economic swings, and demand is projected to be stable due to an influx of new students every year. We will continue localizing our scientific calculators for the language and education system in each country, and develop new sales channels through schools in countries that we have yet to tap into. For electronic dictionaries, we will expand the sales strategy through schools that we developed for the senior high school market, bringing it to the junior high school and elementary school markets.
For the adult market, we will expand our lineup of electronic dictionaries for English conversation learners. We will also develop models for Japanese corporations that receive persons from other countries, and establish a hospitality English proficiency test to encourage wider adoption of our products.
In the electronic instrument business, we will review the product lineup for the education market and develop new products for the entertainment market.
In the system equipment business, we will make fundamental structural changes to strengthen our business position. We will exit the low-profit office printer business as well as unprofitable segments of the office automation (OA) business, and streamline our workforce.
At the same time, we will market solutions to small-scale individual business owners. These solutions will be based on the profitable Rakuichi solutions for OA that strategically leverage Casio’s product strengths, and Casio’s electronic cash registers, which hold a strong market share. For business-use handheld terminals and the projector market, we will strategically develop the business by leveraging our differentiated hardware.
We will launch new businesses without fail during fiscal 2017. We will develop new markets for our specialty printers, which use original 2.5D printing technology to add minute textures to the surface of paper, aiming to develop markets distinct from 3D printers. In the management net business, we will supply Casio’s accumulated business expertise over the Internet. We will also leverage our strengths in wrist devices to develop products that will establish a lead in the wearables market.
Casio will aim to realize further growth together with our shareholders by creating new markets in our business segments, developing new businesses that leverage our technological strengths, and pursuing regional business development on a global scale.
Under our basic policy of delivering stable dividends to shareholders, we have set the dividend to ¥20 per share for the first half of fiscal 2017. Furthermore, as part of our commitment to shareholder returns, we are purchasing treasury stock up to 10 million shares. In November 30, 2016, we retired 10 million shares of treasury stock.
Casio has weathered economic slumps and other challenges by developing innovative products. Our strength lies in developing products that realize business growth regardless of changing market conditions, and this will be our greatest focus and business priority moving forward. In order to ensure that we are on track for earnings growth in fiscal 2018 and beyond, we will put even more focus on product development and continue to practice strategic business management. Thank you for your continued support.