Consolidated Results for the Half Year Ended September 30, 2008

Q&A summary

Click on the appropriate question to view the answer.

Information-related equipment

Q1
I see information-related equipment operating profit in the second quarter was significantly lower than the first quarter. Was this decline primarily due to inkjet printers or business systems?
A
Inkjet printers had the biggest impact. One reason for this was that we were unable to keep down production costs associated with new product launches by as much as we had hoped.
Q2
You say second half operating profit in the information-related equipment segment will be much higher than in the first half. On what assumptions is this based on?
A
This is very much due to seasonal trends. In the first half, we incur costs associated with production of new products for the year-end selling season, while in the second half profitability improves as sales increase for the holiday season. Although we can't afford to be over-optimistic given the current economic situation, we don't expect holiday season sales to be significantly below our current forecasts.
Q3
Why do you expect annual ink cartridge sales to be down on your initial forecasts?
A
We reduced our ASP assumptions for the second half because of the exchange rate situation.
Q4
You say that you want to increase inkjet printer sales by concentrating on emerging markets, but what actual measures will you take to achieve this goal?
A
Until now, we have basically sold to emerging markets lower-end models from our lineups aimed at developed countries. However, we are now more aware of the actual needs of customers in emerging markets. Going forward, our emphasis will be on setting appropriate price levels by creating products with functions specifically aimed at these markets, and on strengthening our sales channels.

Electronic devices

Q5
You mentioned that in the first half there was steady demand for small- and medium-sized displays to certain customers. Tell me how you see demand in the second half.
A
In the first half, we were able to provide high-value-added products to certain customers. While we will still be able to provide similar types of products in the second half, we see demand dropping off. The issue we are currently facing is how well we can cover this decline.
Q6
It looks like the display business will be in a severe situation next fiscal year. What will be your strategy in this business?
A
We will work to develop new applications and to prevent ASPs declining. We are aware that the market environment is tougher than initially forecast, so we must carefully consider where to focus our management resources.
Q7
How were you able to maintain LCD ASPs in the current economic climate?
A
In LTPS TFT LCDs, the proportion of low-priced LCDs for digital cameras fell, while demand increased for LCDs used in high-end mobile phones and PDA phones. There was an improved model mix in amorphous silicon TFT LCDs due to increased orders for high-end products

Overall

Q8
Your profitability will suffer if the Euro remains weak against the yen. Do you intend to maintain the planned annual dividend of 38 yen per share?
A
We aim to maintain stable dividend payments while also remaining aware of the business situation. However, this does not mean dividend payments will be affected by temporary swings in profitability. This is another reason why we must take measures to respond to the effects of the weakened euro.
Q9
The weak euro has a major impact on your profitability. What are you going to do to combat this situation?
A
In the past, we were severely affected by the dollar exchange rate. However, we reduced the impact of this by creating a balance among the currencies used in transactions. We are now considering doing something similar with the euro.
Q10
You say that part of your strategy will be to position yourself as an environmental company, but how will being a leading environmental company tie into business results?
A
Epson's Management Philosophy talks of the Company's commitment to environmental conservation. We believe environmental concerns are a priority for the benefit of our customers and for society as a whole. Going forward, we will focus our environmental efforts on four areas: First, we will contribute to the environment through our products, for example by improving the energy saving capability of our inkjet printers and LCDs, or by reducing the amount of materials used in manufacturing these products. Second, we will look to use our inkjet technology to create industrial processes that are kinder on the environment. Third, we will reduce energy consumption wherever possible in our production processes. Finally, we will contribute to society through activities such as tree planting in various parts of the world, and by our efforts to save the environment.