CEO Message

To all our shareholders and investors

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

Fifth Medium-term Business Plan and its Progress

Junya Suzuki, President and CEO

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 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. Moving forward, we will utilize Graphic Controls Group as a platform to expand its business in the medical market.
  • Efforts toward large orders and expansion of production capacity (Devices)
The Devices business unit rapidly pushed ahead with product development toward the new order, and at the same time made capital investments with an eye to expanding its production capacity. In April 2017, it completed a three-site structure comprising the existing main Himeji Factory (Hyogo Prefecture) and Kaga Factory (Ishikawa), plus the new Tsu Factory (Mie).

Forecast for Fiscal year ending December 2017

Owing to sluggish demand for existing products and the aforementioned prepayments and M&A costs associated with the execution of our budget, profits declined temporarily in the fiscal year ended March 2017. With the cash flow generated through growth investments, we expect our financial performance to return to a path of recovery in and after the fiscal year ending December 2017.
Our growth fueled by business portfolio reorganization and optimization is expected to progress as projected in the Fifth Medium-term Business Plan. Specifically, the mainstay Devices business segment is projected to drive the profit on a company-wide basis, as new large-scale orders received advance to the mass-production phase. In the Industrial Materials segment, meanwhile, the sales for the automotive and metallized paper fields are forecasted to steadily increase. In the Life Innovation Business segment, Graphic Controls group will contribute to profit throughout the term due to its full-year inclusion in the scope of consolidation.
In the fiscal year ending December 2017*, we forecast year-on-year increases in both earnings and profits (up to the third quarter, from April to December, of the fiscal year ended March 2017) as well as the highest level of net sales in Nissha history.

*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.

Operating Results for the three months ended June 30, 2017

Reflecting on the global economy in the three months ended June 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 financial results for the three months ended June 30, 2017 progressed as projected in general. The scale of business of the Nissha Group expanded thanks to the contributions of medical devices and consumables while advanced costs were incurred for the upcoming mass-production phase of large-scale orders received in the mainstay Devices business segment. The net sales for the three months ended June 30, 2017 were 37,122 million yen (an increase of 52.0% as compared to the same period of the previous year). For income, operating loss was 207 million yen (operating loss of  1,018 million yen in the same period of the previous year).

In Closing

As I have mentioned, far beyond traditional boundaries of printing field, we have been evolving and expanding its business, and accordingly decided to change its trade name from Nissha Printing Co., Ltd. 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.
August 7, 2017
Junya Suzuki
President and CEO
Chairman of the Board

Junya Suzuki

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