Consolidated Results for the First Quarter Ended June 30, 2011

Q&A summary

Click on the appropriate question to view the answer.

Overall

Q1
How were Epson's business results affected by the earthquake and tsunami that hit Japan?
A
In the first quarter, we booked an extraordinary loss of 1.7 billion yen. In addition, we estimate a negative effect of 7.9 billion yen on net sales and 3.3 billion yen on operating income. We haven't changed our initial forecast for the full year, which amounts to a 32 billion yen negative impact on net sales and 13 billion yen on operating income.
Among the segments, the impact on devices and precision products operating income was lower than initially expected, while the impact on information-related equipment was greater than we originally forecast.
Q2
Have you changed your initial extraordinary loss forecast?
A
We haven't changed our initial forecast of a full-year extraordinary loss of approximately 10 billion yen.
Q3
Despite adjusting your foreign exchange assumptions you didn't change your net sales or operating income outlooks. Can you explain the thinking behind this?
A
We put together our outlook after carefully calculating the changes to the business environment in the wake of the earthquake and also our sales strategy in each business. Although foreign exchange will have some impact, we believe we can achieve our operating income target of 43 billion yen by implementing cost cuts and other measures. According to our current forecast, each one-yen change in the exchange rate between the yen and the US dollar and the yen and the euro will have a 300 million yen or 1.2 billion yen impact, respectively, on Epson's net sales. It's true that a strong yen certainly has a significant impact on net sales against both the US dollar and the Euro, but - with our results heavily weighted on the third quarter - we are confident we will achieve our forecast by successfully implementing our plan for the year-end selling season.

Information-related equipment

Q4
Please describe your inkjet printer sales strategy.
A
It goes without saying that competing strongly in the home printing market is one of the key goals in our mid-range business plan. Where we have been weak in the past is the SOHO, enterprise and emerging markets. However, based on our current strategy we have been able to lay the groundwork for launching products aimed at these markets.
We have posted steady sales since launching a high-volume ink tank model into emerging markets last year. This fiscal year we will focus on our lineup for SOHO and enterprise. In addition to improving cost competitivity by rationalizing design processes, we plan to compete solidly on functionality. In addition to competing on the strength of our products, we believe these compelling new products will contribute both to net sales and income.
Q5
Please estimate the impact of components restrictions going forward.
A
In the first half, the impact of the earthquake is being felt to a certain extent as we refrained from product promotions due to procurement issues. However, from the end of August procurement will stabilize to normal levels, and we expect to return to full production capability. We will roll out our products as planned based on our strategy.

Devices and precision products

Q6
What is the latest situation in the semiconductor business?
A
We experienced a decline in business to certain customers due to the effect of the earthquake. Going forward, we are looking to recover steadily as we continue negotiations with customers whose products can leverage Epson's strengths in analog semiconductor technologies.