Skip to Main text

Europe

Financial Results Conference Call - Q&A Transcript

2nd Quarter Ended September 30, 2019

Date and Time: 6:30-7:30 p.m. Monday, October 28, 2019

Please note that this document is not a direct transcript of the Q&A session from the conference call, but is a simple summary including additions and corrections at the discretion of the company. The results and forecasts are forward-looking statements determined by the Company based on currently available information that may include risks and uncertainties. Please be aware that actual results may vary significantly due to various factors.

1. Please explain the variance in operating profit for the 1st half of FY2019, in comparison with the 1st half of FY2018.

The factors impacting operating profits will be:

-Sales volume -6.0    billion yen
-Price reduction offset by streamlining 0.0     billion yen
-Impact of foreign exchange -3.0    billion yen (mainly a reactionary drop from a gain on valuation of the BS foreign exchange)
-Recognized profit from changes in customer development associated with the contract manufacture of nucleic acid drugs -5~-6  billion yen
-Other, including product mix +4.0    billion yen

This all combined to give a loss of 10.3 billion yen. In the previous fiscal year, we recorded the above profit from the contract manufacture of nucleic acid drugs and the temporary profits from the transfer of our subsidiary engaged in the printed circuit business and foreign exchange valuation, in the amount of about 10.0 billion yen.

2. Please explain the variance in operating profit for Q2 FY2019, in comparison with Q1.

The factors impacting operating profits will be:

-Sales volume +16.0   billion yen
-Price reduction offset by streamlining -1.0      billion yen
-Impact of foreign exchange -3.0      billion yen
-Fixed costs -2.0      billion yen (-1.4 billion yen for increase in personnel costs)
-Other, including product mix +1.0     billion yen

This all combined to give a profit of 11.3 billion yen.

3. Please explain the variance in operating profit in the revised forecast for the 2nd half of FY2019 in comparison with the 1st half.

The factors impacting operating profits will be:

-Sales volume +5.0   billion yen
-Price reduction offset by streamlining -2.0    billion yen
-Impact of foreign exchange -5.0    billion yen
-Product mix -8.0    billion yen
-Other -1.0    billion yen

This all combined to give a loss of 11.2 billion yen.

4. Please explain the factors behind the jump in operating profit as compared with the Optronics performance forecast for Q2 and the first half.

The peak for the smartphone production was shifted to the first half from the usual seasonality, which had had a peak in the second half, in some customers.
The volume of sales to that customer was increased, and in addition, sales of products with higher value-added processing was increased as well. Furthermore, production for major customers has begun in Q2. The main factor is that the product mix in the sales for Information Fine Materials has improved thanks to the foregoing.

5. Please tell us about the outlook for Q3 and onward for Optronics.

The outlook for Q3 and onward is a leveling-off for products for TVs, and decreases in products for other applications including ITO.
ITO, which has customers in slightly upper stream of the supply chain, are expected to decline significantly due to the seasonality. The forecast for the second half is relatively cautious because of the unclear inventory level of the customers who had a production peak in the first half, together with the impact of foreign exchange.

6. Please tell us about the factors for the jump in the performance of Life Sciences in the first half as compared with the forecast, together with the outlook for the expenses for the nucleic acid drug discovery.

The contract manufacture of nucleic acid drugs showed steady performance as the major maintenance was completed in Q1 as planned and the equipment has been in steady operation since Q2. In addition, sales of “LONASEN® Tape,” atypical antipsychotic jointly developed with Sumitomo Dainippon Pharma Co., Ltd., were commenced in September 2019, and the drug price was higher than expected. These factors contributed to the jump in the performance in the first half. The R&D expenses for drug discovery are, at this moment, expected to be the same level as the previous fiscal year.

7. Please tell us about the outlook for the second half for Industrial Tape.

Although steady recovery of the economy in the second half was anticipated at the beginning of the fiscal year, the forecast was subsequently revised. We have been unable to capture demand sufficiently in this sector while some markets, as seen in the Optronics sector capturing demand, have been enlivened. Although it is difficult for us to show a clear outlook for the next fiscal year at this moment, we are working with our customer to capture their new demands.
The performance of Transportation is affected by weak production in automobiles. We are working to secure our competitiveness through such efforts as the structural reform at overseas production sites.

Contact Us

For any inquiries about Investor Relations.

Business Hours (WET)
8:00h-17:00h(Except for Sat, Sun, and Holidays)

Back to Page Top