Q&A of Financial Results for the Year Ended March 31, 2016
The following includes questions and answers at the conference for the financial results for the Year Ended March 31, 2016.
Precision Equipment Business
Q. Can you tell us about impairment loss in your Semiconductor Lithography Business for the year ended March 2016?
A. We take seriously the fact that we posted impairment loss of approximately 15.2 billion yen in the year ended March 2015 and again in the year ended March 2016 in the amount of approximately 7 billion yen.
While we are pushing forward with cost reductions, there has been limited progress in our attempts to secure earnings through increased sales of our leading ArF immersion scanners. As such, we have not reached our medium-term goal of bringing this business into the black.
As the performance of this business is greatly affected by unit sales of our cutting-edge ArF immersion scanners, we need to make further cost cutbacks and speed up fundamental structural reforms in addition to also focusing on ArF dry, KrF Scanners and i-Line Steppers in line with the trend towards IoT (Internet of Things).
Q. Can you tell us about the market forecast of FPD lithography system for CY2016?
A. For our previous forecast announced in the 3Q financial results (as of February 4), we stated that it is possible for the size of the FPD lithography system market during CY2016 to exceed the actual number of units in the market during CY2015 by about 40%. However, as investment plans for small and medium-sized panels have continued to gain momentum and investment plans for large-sized panels have also held strong since then, our view at this juncture is that the size of the market during CY2016 will exceed the actual number of units in the market during CY2015 (approximately 80 units) by about 50% to reach approximately 120 units.
Similarly, our forecast is that sales of FPD lithography systems in the year ending March 2017 will increase considerably from the 51 units sold in the year ended March 2016 to reach 90 units sold. We intend to continue keeping an eye on market trends and flexibly handle any shifts that come about.
Imaging Products Business
Q. Can you tell us about the impact of the "2016 Kumamoto earthquakes" on your business performance?
A. The earthquakes have affected suppliers of parts for a wide range of our products, including digital cameras-interchangeable lens type, interchangeable lenses and compact digital cameras. We anticipate that this will impact our sales and production. We have factored that impact into our latest business performance forecast based on information currently available to us. As such, please understand that said forecast constitutes "target figures" at this point in time, and contains considerable uncertainty.
Currently, in addition to gathering information together with multiple suppliers based in earthquake-stricken areas, we are taking whatever steps are in our power to address the situation. However, we anticipate that production at our parts suppliers overall will not be fully restored until around July. For the months of April through July, we will handle production primarily with the use of parts inventory. From August and September onwards, we plan on starting up production with priority placed on middle and high-end class digital SLR cameras and interchangeable lenses, and endeavor to recover our share of the market with a full production during the second half of the year ending March 2017.
Q. Can you tell us about your digital camera unit sales forecast for the year ending March 2017?
A. The latest forecast that we have announced constitutes our "target figures" for units sold of digital cameras at this point in time, which takes into account the contractionary trend of the market overall, the impact of the Kumamoto earthquakes and the delay in the release of our new compact digital cameras that we recently announced.
Based on the above conditions, we have forecasted 3.2 million unit sales of the digital cameras-interchangeable lens type, a year-on-year decrease of 21%; 4.9 million unit sales of interchangeable lenses, a year-on-year decrease of 17%; and 3.7 million unit sales of compact digital cameras, a year-on-year decrease of 41%.
Q. Can you tell us about the impact of foreign exchange rates and the cash dividends for the year ending March 2017?
A. Our assumed foreign exchange rate for the year ending March 2017 is 110 yen/USD and 120 yen/Euro.
Currently, we expect every 1 yen change in the yen/USD exchange rate to impact net sales by 3.5 billion yen, and every 1 yen change in the yen/Euro exchange rate to impact net sales by 1.2 billion yen. Similarly, we expect every 1 yen change in the yen/USD exchange rate to impact operating income by 100 million yen, and every 1 yen change in the yen/Euro exchange rate to impact operating income by 800 million yen.
With regards to the estimated cash dividends for the year ended March 2017, given the considerable uncertainty surrounding our Imaging Products Business, we have established both interim and year-end cash dividends as undetermined at this point in time.