Overview of Consolidated Financial Results
During the year ended March 31, 2010 (“fiscal 2010”), global production of digital consumer equipment showed signs of recovery, and there was steady growth in the solar energy market, especially in Japan, due to expanded government subsidies. However, the company’s revenues were impacted by the appreciation of the yen against the Euro and U.S. dollar. Consequently, while consolidated net sales for fiscal 2010 exceeded the company’s original and upwardly revised forecasts, they represent a 4.9% decrease compared with the prior year’s results, to JPY1,073,805 (USD11,546; Euro8,590) million.
In response to the challenge of an overall reduction in sales, Kyocera strived to improve profitability and strengthen the foundation of each business segment by reducing costs in all areas of the company, and by improving productivity throughout the Kyocera Group. As compared to the prior year, profit from operations for fiscal 2010 increased 47.1%, to JPY63,860 (USD687; Euro511) million, despite a loss on accounts receivable from WILLCOM, Inc. totaling JPY8,961 (USD96; Euro72) million. Additionally, income before income taxes increased 8.6%, to JPY60,798 (USD654; Euro486) million, despite an impairment loss on an investment in WILLCOM Inc. totaling JPY19,987 (USD215; Euro160) million. Net income attributable to shareholders of Kyocera Corporation increased 35.9%, to JPY40,095 (USD431; Euro321) million.
Exchange rates averaged JPY93 to the U.S. dollar and JPY131 to the Euro, representing appreciation of JPY8 (approximately 8%) and JPY12 (approximately 8%), respectively. As a result, net sales and income before income taxes (after full translation into yen) were, for calculation purposes, reduced by approximately JPY49.0 billion (USD527; Euro392 million) and JPY13.5 billion (USD145; Euro108 million) respectively.
In the components business, sales decreased 4.6%, to JPY550,535 (USD5,920; Euro4,404) million; however, operating profit increased 55.6%, to JPY49,535 (USD533; Euro396) million.
In the equipment business, sales decreased 5.9%, to JPY421,483 (USD4,532; Euro3,372) million; however, operating profit increased by JPY11,581 (USD125; Euro93) million, from a loss in fiscal 2009 to a profit of JPY7,365 (USD79; Euro59) million in fiscal 2010.
The “Others” segment comprises various businesses, including information and communications technology (ICT) services, and materials for electronic components. Sales in this reporting segment decreased 1.2%, to JPY124,577 (USD1,340; Euro997) million; and operating profit decreased 52.0%, to JPY6,769 (USD73; Euro54) million, due to the absence of gains on sales of fixed assets, including real estate, recorded in fiscal 2009, in the amount of approximately JPY9.4 billion (USD101; Euro75 million).
Outlook and Future Prospects
Kyocera believes the global economy will continue to move toward recovery in the year ending March 31, 2011 (“fiscal 2011”), as demand for digital consumer equipment grows — particularly in developing countries — and production increases in the industrial equipment and automotive markets. These trends, combined with the forecast for global growth in the solar energy market, lead Kyocera to expect an improved business environment in fiscal
2011.
Kyocera will continue to strengthen the foundations of its businesses with initiatives carried over from fiscal 2010 to reduce costs while capitalizing on opportunities for growth. The company will also strive to improve performance by reinforcing new product development, aggressively launching new products and cultivating new markets.
In the components business, Kyocera will expand manufacturing capacity to meet increasing demand for products used in digital consumer equipment, while seeking to expand sales in emerging markets. Kyocera will also meet strong demand in the solar energy business through expanded production capacity and sales channels. In the equipment business, Kyocera will introduce new products such as mobile phone handsets, printers and digital MFPs in response to evolving market needs, with plans to further expand sales and profits globally, and improve profitability in its telecommunications equipment business.
Through these initiatives, Kyocera will strive to achieve its full-year financial forecasts for fiscal 2011 with the aim of achieving high growth and high profitability.
Consolidated Forecasts: Full Year Ending March 31, 2011
Net sales1,073,8051,200,00011.8Profit from operations63,860122,00091.0Income before income taxes60,798132,000117.1Net income attributable to shareholders ofKyocera Corporation40,09585,000112.0Diluted earnings per share attributable toshareholders of Kyocera Corporation218.47463.15-Average USD exchange rate 9390-Average Euro exchange rate 131120-Increase(Decrease)to Fiscal 2010Results%Fiscal 2010Results Unit: yen in millions (except percentages, per-share amounts and exchange rates)Fiscal 2011Forecast
Notes:
1. Net income attributable to shareholders of Kyocera Corporation is calculated based on accounting principles generally accepted in the U.S.A.
2. Forecast of earnings per share is computed based on the diluted average number of shares outstanding during the year ended March 31, 2010.
ORWARD-LOOKING STATEMENTS
Except for historical information contained herein, the matters set forth in this press release are forward-looking statements that involve risks and uncertainties including, but not limited to, product demand, competition, regulatory approvals, the effect of economic conditions and technological difficulties, and other risks detailed in the Company's filings with the U.S. Securities and Exchange Commission.
