Consolidated Results for the Full Year Ended March 31, 2009

Q&A summary

Click on the appropriate question to view the answer.

Information-related equipment

Q1
How does management feel about the FY2009 forecasts? What kind of measures will you take to achieve your targets?
A
Management is making every effort to return the business to profitability. The forecast for the current year was determined by calculating the effects of the impairments carried out last year, the reductions in fixed costs including overall labor costs, and the introduction of improved and lower cost versions of the products that proved so popular last year. On the other hand, the extent of the recovery of the market for relatively profitable business products remains a risk, and we are making every effort to reduce that risk. Market conditions are extremely tough, but we are hoping our efforts will enable us to break even at the ordinary income level.

Electronic devices

Q2
Please explain the thinking behind the printer lineup to be launched in FY2009.
A
In consumer products, we will achieve the dual goals of improving on the popular products of last year while reducing costs through measures such as reducing and standardizing platforms and parts. In large-format printers, we are planning to increase the diversity of our inks and customize products to broaden their appeal. We also intend to strengthen our lineup of fax-equipped multifunction printers.
Q3
How are you planning to achieve cost reductions in multifunction printers?
A
We will achieve cost reductions by implementing design innovations such as mounting electronic circuits on a single chip and integrating functions such as the fax and automatic document feeder (ADF).
Q4
Why did printer consumables end below plan in FY2008?
A
The main reason for this was due to the temporary phenomenon of a squeeze on printer consumables channel inventories. Although we are certainly not going to rest on our laurels in the current fiscal year, we are hopeful that improvements in our install base will begin to bear fruit in terms of consumables sales.
Q5
Please tell me about the trends in printers and mobile phones in the first quarter of FY2009.
A
We believe that the market for business printers has bottomed out, but that the recovery will be slow. The big issue here is how quickly enterprise will begin to resume corporate investments. It is difficult to give a definitive answer on consumer printers as we are not in the peak selling season. However, it seems that the current trend is towards low-price models. Please be aware, though, that conditions vary among markets. In Japan, Europe and North America, for example, relatively high-priced models have been selling well, but a lot will depend on local market conditions. In displays, we are looking towards boosting smartphone applications. Recovery in this market seems to be quicker than for finished products such as printers. To summarize therefore, the recovery for electronic devices seems to be relatively advanced, while the recovery for finished products for business seems to be delayed.

Overall

Q6
What is the latest on the negotiations with Sony about the small- and medium-sized display business?
A
We cannot give any details at this stage. We are looking to conclude discussions by the end of June.
Q7
What basis do you have for forecasting only a minor decline in quartz device net sales in FY2009? How do you intend to compete against the entry of Asian manufacturers at the low end of the market?
A
In the current fiscal year, we see prices falling but volumes increasing. This will result in a slight net sales decline. Although there has been growing competition from Asian manufacturers at the low end, there has so far been little impact on Epson's mainstream 32 KHz products. However, Taiwanese manufacturers have emerged in the market for temperature-compensated crystal oscillators (TCXO) products, and we are experiencing increased competition. Medium-term, Epson's strategy is to maintain production of its general-purpose products outside Japan. We are also introducing manufacturing innovations that will enable us to introduce high-productivity methods that other manufacturers will not be able to match.