Consolidated Results for the Half Year Ended September 30, 2007

Q&A summary

Click on the appropriate question to view the answer.

Information-related equipment

Electronic devices

Information-related equipment

  • Q1

    How were sales volumes and ASPs for inkjet printer consumables?

  • A

    In the first half, both volume and ASPs increased slightly compared to the same period last year. In the second half, we see volume increasing in the mid 10-20% range, and ASPs falling by around 10%.

  • Q2

    By how much do you see consumables volume growing over the full fiscal year?

  • A

    We were down against our initial plan in the first half due to a slow start to the period. However, we think volume will increase steadily going forward, and believe we can achieve plan for the full year.

  • Q3

    How were ASPs for inkjet printer hardware in the second quarter? Please also give me an idea about volume and ASPs for the full year.

  • A

    In the second quarter, ASPs declined in the low 10-20% range compared to the same period last year. Over the full year, we see volume increasing by more than 10% and ASPs falling by somewhere in the mid 10-20% range.

  • Q4

    One of your competitors in the inkjet printer market seems to be losing sales volume. How will this affect Epson, and what will be your marketing strategy for the inkjet market?

  • A

    The company you are talking about mainly offers low-priced printers, and we therefore don't see much of an effect on our business. Going forward, we will be rolling out marketing strategies specific to the needs of each individual market. Our marketing campaigns and product lineups will aim to increase our presence in each region.

  • Q5

    Can you give an idea of the recent sales trends for inkjet printers in each region?

  • A

    Compared to the same period last year, sales volumes in the first half declined in Japan, increased in the mid 10-20% range in both Europe and the United States, and were flat in Asia.

  • Q6

    How much will you spend on sales promotions in the second half?

  • A

    Unfortunately we can't give an exact figure for competitive reasons. However, I can tell you that there are no changes in our plan to use an appropriate level of funds for sales promotions to support our strategy of increasing inkjet printer sales volumes.

  • Q7

    How much scope is there to reduce costs in inkjet printer hardware?

  • A

    For any manufacturer, cost cutting is an ongoing and constant process, and is not aimed at any one finite goal. Anyway, as ASPs continue to fall, we believe we can achieve our cost cutting targets for the full year.

  • Q8

    I get the impression that laser printers are eating into the inkjet printer market. What's your strategy for dealing with this?

  • A

    In color printing for business, there are still opportunities for growth for both inkjets and lasers. We think we can leverage inkjet printers to expand the color printing market, and believe that the low energy consumption of inkjet will be an important point when we talk about environmental credentials.

  • Q9

    Do you think inkjets will take away some of the laser market?

  • A

    Yes. Inkjet is one of our core technologies, and we believe that can be the case. We are still discussing exactly how we will do this, but you can be sure we are pouring considerable resources into developing inkjet printers.

  • Q10

    There have been new alliances and various upheavals in the display industry recently. Do you think Epson has been left behind?

  • A

    Although the level of profitability in the consumer market is low, we still think it is very important to retain a presence from the point of view of maintaining our brand name and purchasing ability. On the other hand, despite its current smaller scale, we would like to nurture the business market with its high profit margins as a key future profit generator.

  • Q11

    In the second quarter, what was the proportion of operating income generated by visual instruments in the information-related equipment segment?

  • A

    We don't disclose a breakdown of quarterly operating income by business. However, just as an indicator, we can tell you that the contribution from visual instruments is growing.

  • Q12

    Why did you raise your full-year operating income forecast for the information-related equipment segment?

  • A

    Inkjet printers, business systems, and 3LCD projectors are all faring well. We also see the effects of the weakened yen.

  • Q13

    If business systems are doing so well, then why was the second quarter flat compared to the previous year? What trends do you see going forward?

  • A

    Business systems comprises mainly of serial impact dot matrix (SIDM) printers and point-of sales (POS) related systems. Because our business is generally based around comparatively large deals, it's usually better to look at the picture for the full year rather than for each quarter. SIDM and POS-related systems have high operating margins and have done well recently; the former from orders from Chinese banks, and the latter from business from large retailers. We will aim to further grow these businesses by continuing with our strategy of offering proposals that suggest improvements to customer business processes.

Electronic devices

  • Q14

    With recent higher levels of factory utilization, how is it that results for small- and medium-sized displays will be below plan in the second half?

  • A

    As we announced in March, we are going to move forward this fiscal year by concentrating our management resources on amorphous-silicon TFT and LTPS LCDs. However, results in the first half were below the initial plan due to fluctuations in demand from our customers and from issues involved in meeting some orders. Although we have seen recent volume growth in both amorphous-silicon TFT and LTPS, price erosion has meant delays to any improvement in the profitability picture. For this reason, we have revised our forecast for the second half.

  • Q15

    Results in the display business have not improved despite the restructuring measures you took last year. What are you going to do about this situation? And what time frame are you thinking about?

  • A

    Our first priority will be to strengthen the business, and improve profitability by realigning the product portfolio. However, we are well aware of the need to step up the measures we are taking, and are presently exploring a wide range of possibilities. We hope to determine the direction for the display business sometime this fiscal year.

  • Q16

    You say you are trying to increase the ratio of sales for non-handset applications. How is this strategy shaping up right now?

  • A

    The proportion of net sales for handset applications was in the mid 70% range in the previous fiscal year. In the first half of this year, this was down to somewhere in the mid 60% range. We are going to continue with this policy going forward.

  • Q17

    Was the full year downward revision in displays caused by lower demand for LCDs for handset or non-handset applications?

  • A

    The profitability picture is poor for both handset and non-handset LCDs, so both contributed to the situation.

  • Q18

    If the visual instruments business is doing so well, how is it that HTPS panels for projectors are below plan?

  • A

    HTPS panels are also used in home projection products including projection TVs, and poor sales for the home market were a major contributing factor. While sales of Epson brand projectors for business have been good, we failed to achieve plan for HTPS because some of the other manufacturers who purchase our panels have not done so well.