Q&A of Financial Results for the First Quarter of the Year Ending March 31, 2017
The following includes questions and answers at the conference for the financial results for the First Quarter of the Year Ending March 31, 2017.
Precision Equipment Business
Q. Can you tell us about unit sales for ArF immersion scanners in the Semiconductor lithography business?
A. There is no change to our forecast of 9 unit sales for the year ending March 2017. While we are continuing to make cost reductions in our Semiconductor lithography business, it remains difficult to improve our earning capacity by increasing the sales of scanners. As mentioned at the time of the previous announcement of our financial results in May, our performance is significantly affected by the number of sales of ArF immersion scanners. We need to improve this business structure by putting more resources into ArF dry, KrF and i-line in line with IoT trends. We will also push forward with measures geared towards improving our earnings structure, including measures for further cost reductions.
Q. Can you tell us about the forecasts of the FPD lithography system market forCY2016 and CY2017?
A. There is no change to our forecasts for the CY2016 FPD lithography system market (Approx. 120 units) and our forecasts for unit sales (90 units) of the current period made at the time of the announcement of our financial results on May 13. Although we have changed the accounting policy for the sales recognition of the Precision Equipment Business from the year ending March 31, 2017 to recognize at the time when the installation is completed, there is no change to the expected number of unit sales (90 units) for the current period. For the CY2017 FPD lithography system market, we predict approx. 80 units currently and will have more visible market trends until the latter half of the year. We will keep a close eye on market trends and hope to respond to any changes in a flexible manner.
Imaging Products Business
Q. Can you tell us about the impact of the "2016 Kumamoto Earthquakes" on your business performance?
A. We have made an upward adjustment of our forecast for the first half of the year ending March 2017 as the sales units for the first half will exceed the previous forecasts in May. On the other hand, we anticipate a negative impact on sales in the second half due to the temporary supply shortage caused by the earthquake. Especially, we think that there remains uncertainty about the sales situation at the Year-end shopping season when the sales volume increases most. While there is no significant change to previous forecasts as a result of the impact on business performance due to the earthquake, we have made a downward adjustment of forecasted net sales and operating income for the imaging products business in consideration of the appreciation of the yen. We will continue to implement sales activities that respond to the market trends and keep expenses in check in order to secure our targeted profit.
Q. Can you tell us about your digital camera unit sales forecast for the year ending March 2017?
A. Due to the current market situation and the prospects of parts supply, we have made a downward adjustment in compact digital camera unit sales forecast for the year ending March 2017 from 3.7 million units to 3.35 million units, while we have made an upward adjustment of our previous forecast for digital cameras- interchangeable lens type from 3.2 million units up to 3.35 million units. We have made no change to our sales forecast for interchangeable lenses of 4.9 million units.
Q. Can you tell us about the impact of foreign exchange rates and cash dividends for the year ending March 2017?
A. At the time of the previous announcement of our financial results on May 13 our assumed foreign exchange rate for the year ending March 2017 was 110 yen/USD and 120 yen/Euro. In consideration of the most recent exchange rate levels, our assumed foreign exchange rate for the 2Q and beyond is 105 yen/USD and 115 yen/Euro, anticipating a 5 yen increase against each respective currency. We expect every 1 yen change in the yen/USD exchange rate to impact net sales in the 2Q and beyond by approximately 2.7 billion yen and every 1 yen change in the yen/Euro exchange rate to impact net sales by approximately 900 million yen. Similarly, we expect every 1 yen change in the yen/USD exchange rate to impact operating income by approximately 200 million yen and every 1 yen change in the yen/Euro exchange rate to impact operating income by approximately 600 million yen.
We left interim and year-end dividend forecasts for the year ending March 2017 undetermined in our previous announcement. In consideration of performance forecasts over the first half, including business performance over the 1Q, we plan that interim dividends will total 12 yen/share. In relation to year-end dividends, just as we made a downward adjustment of forecasts for the second half, we will leave these undetermined for the time being as a result of a lack of uncertainty of the impact of the economic situation in the US and Europe and resultant changes in the foreign exchange market etc.