CEO Message

To all our shareholders and investors

We extend our sincere gratitude to all shareholders and investors for your continued support.
 

Operating Results for the three months ended September 30, 2017

Junya Suzuki, President and CEO

Reflecting on the global economy in the six months ended September 30, 2017, the United States saw ongoing recovery thanks primarily to increased consumer spending and improved employment conditions. In Europe, there remained uncertainty for the future attributable to Brexit and other factors but the economy gradually recovered. In Asia, the economies of emerging countries such as China showed signs of recovery. As for Japan, the economy held steady on an ongoing moderate recovery trend but due consideration must be given to uncertainty over overseas economies, foreign exchange fluctuations and other factors.
The Nissha Group is pursuing growth by reorganizing and optimizing its business portfolio in the Fifth Medium-term Business Plan starting from April 1, 2015. The Nissha Group continues to expand business opportunities in the consumer electronics (IT) field and is accelerating business developments in fields where stable growth on a global scale is expected, such as automotive components and medical devices and consumables. During the six months ended September 30, 2017, in addition to an expansion in demand for large-scale projects in the mainstay Devices business segment, demand for automotive components and medical devices and consumables, both of which are designated as priority fields, progressed steadily.
The net sales for the six months ended September 30, 2017 reached a record high of 95,015 million yen (an increase of 84.0% as compared to the same period of the previous year). For income, operating income was 1,839 million yen (operating loss of 1,037 million yen in the same period of the previous year).

Forecast for Fiscal year ending December 2017

In the October–December period (Q4),* large-scale projects in our mainstay Devices business are expected to continue driving profits for the group overall. With demand expected to remain strong also for automotive products and metallized paper in the Industrial Materials business, and for medical devices and consumables in the Life Innovation business, growth fueled by business portfolio reorganization and optimization is progressing as projected in the Fifth Medium-term Business Plan.

* We changed the fiscal year end from March 31 to December 31 and unified the fiscal year on a global basis. The period of December 2017, which is the elapsed period, is the nine-month account settlement period from April 1, 2017 to December 31, 2017 (Q1, Q2, and Q4).

Fifth Medium-term Business Plan and its Progress

As I mentioned, the Nissha Group started operating the three-year Fifth Medium-term Business Plan on April 1, 2015, aiming for growth through a reorganization and optimization of our business portfolio. With our primary market at present, consumer electronics (IT), as prone as ever to drastic fluctuations in product demand and declining product and service prices, we are pressed to cultivate comparable growth markets. By continuing to expand business opportunities in the consumer electronics field while also scaling up efforts in the automotive, medical devices, and other markets that promise stable growth on a global basis, we aim to establish a balanced business foundation and maximize our corporate value over the medium to long term.
In order to complete the reorganization and optimization of our business portfolio, we allocated a budget of 35 billion yen for M&A and 26 billion yen for capital investment over the three-year course of the medium-term business plan. We used nearly all of this before the end of the second year. Owing to prepayments and M&A costs associated with the execution of the budget, profits declined temporarily in the fiscal year ended March 2017. We expect our financial performance to return to a path of recovery in and after the current fiscal year.
An outline of our growth investments to date is given below.
  • Entry into the Metallized Paper field (Industrial Materials)
In August 2015, the Industrial Materials business unit acquired the AR Metallizing Group, a global leader in metallized paper for high-end labels and packaging, and made it a subsidiary. In so doing, we incorporated production and sales of metallized paper, which is a business upstream of and closely related to the printing business, into our business portfolio and expanded our reach in the global market to include food, beverage, consumer products and others.
  • Expansion of the Automotive field (Industrial Materials)

Our Industrial Materials business unit aims to widen the scope in the automotive field which is expected to grow on a global basis and is designated as a key market, and is improving product line-ups and building supply chains adapting to the needs of our automotive customers. In October 2016, we acquired Schuster engaged in the manufacturing and sales of automotive interior plastic molded components in Europe, and Back Stickers including its related group companies engaged in the manufacturing and sales of decorative films as subsidiaries of Nissha. As the supply chains of the automotive market are spread in some communities of the world, we have expanded production bases in Southeast Asia, USA and Mexico so far. Through the acquisition of Schuster and Back Stickers Group, we gained manufacturing bases in Europe which is important to the automotive market along with new decoration technology and solid sales channels in Europe. In the future, we are planning to create synergies for the purpose of expanding the business.

  • Entry into the Medical Devices Market (Life Innovation)
In September 2016, we acquired, and made a subsidiary of, Graphic Controls Group, an US-based medical devices and consumables manufacturer, and positioned as a central business company of the life innovation business.
The medical devices and consumables sector in which the Graphic Controls Group is involved is forecast to grow on a global basis, against a backdrop of an increasingly aging society and proliferation of preventative medicine. The Graphic Controls Group manufactures and sells its own brand products to medical institutions such as hospitals, and also provides contract manufacturing services for major medical device manufacturers in the North and Central America and Europe. Their products, such as mainstay disposable electrodes and medical surgical consumables for medical institutions, and manufacturing capabilities, such as converting technologies, electrode patterning formation and precision injection molding, have high compatibility with Nissha’s core technologies. The acquisition of the Graphic Controls Group provide us a broad product portfolio of medical devices and consumables and sales channels in the North and Central America and Europe to expand its business in the medical devices and consumables sector.
In October 2017, Graphic Controls acquired French medical devices manufacturer Integral Process SAS, expanding its product lineup and securing a sales channel and local production structure in Europe.
  • Efforts toward large orders and expansion of production capacity (Devices)
The Devices business unit made capital investments in the fiscal year ended March 2017 with an eye to new orders through product development and an expansion of production capacity. It established a three-site production structure comprising the Himeji Factory (Hyogo Prefecture), the Kaga Factory (Ishikawa Prefecture), and the new Tsu Factory (Mie Prefecture), and is currently handling mass production of large-scale projects.

In Closing

Far beyond traditional boundaries of printing field, we have been evolving and expanding its business. We changed our trade name to Nissha Co., Ltd. “Nissha” is a corporate brand that has been familiar with our customers, shareholders, suppliers and local communities throughout the years, and is now globally recognized.
This trade name change is another opportunity for us to make even greater leap forward. I ask our stakeholders for your continued support as developments unfold at the Nissha Group.
November 8, 2017
Junya Suzuki
President and CEO
Chairman of the Board

Junya Suzuki

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