Consolidated Results for the Full Year Ended March 31, 2011

Q&A summary

Click on the appropriate question to view the answer.

Overall

Q1
What has been the impact of the Tohoku area earthquake on Epson?
A
As reported in our fiscal 2010 "Consolidated results and supplementary information," we recorded an extraordinary loss of 4.7 billion yen. There has also been an impact on our net sales and operating income, but we haven't reported these as individual amounts.
In fiscal 2011, we have at the current stage identified an impact of 32 billion yen on net sales and 13 billion yen on operating income, and have factored these figures into our outlook. The majority of the 13 billion yen is comprised by the crystal device and semiconductor manufacturing plants in the Tohoku area, where we will need to respond to power supply restrictions.
Q2
Why haven't net sales been growing in the last few years?
A
In fiscal 2010, we suffered an impact of 60 billion yen compared to the previous year due to foreign exchange effects. We have also experienced a dip in net sales due to the structural reforms in our electronic device businesses, especially the termination of the small- and medium-sized display business. However, net sales are in fact expanding in our growth businesses. Our fiscal 2011 outlook is predicated on net sales growth, and we are striving to return to the growth trajectory as we look towards 2015.
Q3
How will you improve profitability?
A
We will look to expand unit sales in growth areas such as SIDM and POS in emerging economies and also for inkjet printers for enterprise. We will also continue to improve manufacturing efficiency and reduce variable costs.

Information-related equipment

Q4
What has been the impact of the earthquake on components procurement?
A
In fiscal 2011 we were looking to expand inkjet printer unit sales over and above market growth. However, because of restrictions on manufacturing caused by procurement issues on certain components we only see slight growth over the previous year.
At present, we believe we can respond to the forecast effect on other products, and do not see a significant impact.
Q5
How did you see inkjet printer market trends in fiscal 2010, and how did Epson respond?
A
In fiscal 2010, the market didn't recover to the level we had expected and consequently unit sales didn't grow as much as we had initially forecast. Against a background of price cutting by competitors in certain regions we were able to avoid significant price reductions and also expand unit sales. We were also able to strengthen our lineup by, for example, launching a high-capacity ink tank model for emerging markets and models for SOHO and business in Europe and North America.
Q6
In which inkjet printer markets do you anticipate growth?
A
In large-format printers, we will add models for signage, etc., to complement our existing lineup of products emphasizing high-quality output. In addition, the inkjet minilab that we launched in the second half of fiscal 2010 has been successful and we see it contributing over the next year. We also launched a label printer in fiscal 2010, and we plan to steadily introduce it to the market over the course of the current fiscal year.
In emerging economies we successfully launched inkjet printers with high-capacity ink tanks that have proved to be very popular. We will aggressively promote them in China and other emerging economies in fiscal 2011. This year we are also planning powerful additions to our lineup of products for enterprise.
Q7
How do you see business systems (SIDM and POS) in the medium term?
A
In China, demand for tax collection systems will expand from the coastal areas to inland regions. We also believe there will be demand for tax collection systems in regions such as Brazil, Southeast Asia, and Africa going forward, and forecast high demand for such systems incorporating SIDM printers, with their durability and low running costs. We believe we can respond to this demand as we have already built a sales network in these areas, and have high market share.
We believe demand for POS-related products will also expand in a variety of ways as demand for tax collection systems grows dramatically in emerging economies.

Electronic devices

Q8
What is the current utilization rate in semiconductors?
A
The Sakata Plant has just resumed front-end semiconductor manufacturing processes. Going forward, we will install our own power generation facilities to respond to the power supply restrictions and minimize the impact on production. Although utilization rates are still low as we have just restarted production, we plan to return to previous levels within the next month.