CEO Message

Dear shareholders and investors,

Thank you for your continued support of the Nissha Group.

Operating Results for the 2nd Quarter Ended June 30, 2019

The global economy, on the whole, gradually recovered in the six months ended June 30, 2019, despite the prevailing uncertainties in the outlook due to protectionist economic policies and trade frictions, and the weakness found in some areas. The United States saw ongoing economic recovery thanks primarily to increased consumer spending and capital investment. In Europe, the economy gradually recovered, though there was some weakness. In China, the economy slowed down gradually, and in other Asian emerging countries, the economic recovery turned out to be weak. The Japanese economy has continued a gradual recovery, although there is some weakness in its export and production.
The Group has been currently operating the Sixth Medium-term Business Plan (three-year plan) centering on the growth by reorganizing and optimizing its business portfolio. We have set the markets of mobility (automotive), medical devices and sustainable packaging materials as our focused markets, in addition to the mainstay consumer electronics (IT), and aim to develop well-balanced business bases and enhance our corporate value by implementing global based growth strategy. Regarding the financial results for the six months ended June 30, 2019, although the Medical Technologies segment performed well, the operation rate of the production department dropped as demand for the Devices segment and the Industrial Materials segment fell short of the projection.
As a result, regarding the consolidated financial results for the six months ended June 30, 2019, the net sales were ¥73,100 million (an increase of 0.8% as compared to the same period of the previous year). EBITDA was negative ¥1,080 million (positive ¥132 million in the same period of the previous year). Operating loss was ¥5,829 million (operating loss of ¥4,476 million in the same period of the previous year). Ordinary loss was ¥6,387 million (ordinary loss of ¥5,954 million in the same period of the previous year). Loss attributable to owners of parent was ¥7,569 million (loss attributable to owners of parent of ¥6,754 million in the same period of the previous year).

Forecast for the Year Ending December 2019

For consolidated business forecast for FY2019, we have considered the latest demand trends and other factors based on the results for the six months ended June 30, 2018. Net sales are expected to decrease compared to the previous forecast mainly because demand in the Devices segment is likely to decline compared to our original estimate and demand for Chinese market in the Industrial Materials segment is weak. For profit, EBITDA, operating profit and ordinary profit also are expected to fall below the previous forecast mainly owing to the impact of the decrease in net sales.
In addition, profit attributable to owners of parent is expected to decrease compared to the previous forecast due to the above-mentioned reason, while we plan to dispose of idle fixed assets, etc.

  Previous Forecast
FY2019.12 Full year
(Jan.-Dec.)
Revised Forecast
FY2019.12 Full year
(Jan.-Dec.)

Net Sales

(Millions of yen)

195,000 180,000

EBITDA

(Millions of yen)

18,800 11,800

Operating profit

(Millions of yen)

8,500 1,500

Ordinary profit

(Millions of yen)

7,800 500

Profit attributable to owners of parent

(Millions of yen)

6,000 0

In Conclusion

Our mission is to use the diverse talents of our people and our core technologies as an engine for growth to create highly competitive, feature-rich products and services that offer value to customers and contribute to better lives for all. Guided by this mission, we are executing our medium-term business plan to achieve a balanced business and improved corporate value. October 6, 2019 will mark our 90th year in business. We are calling 2019 Milestone 90 to reflect this important waypoint between our past and our future as we aim for even higher levels of growth.

Once again, I want to thank you, our shareholders and investors, for your support to the Nissha Group as we grow into the future.

August 6, 2019
Junya Suzuki
Chairman of the Board
President and CEO

Junya Suzuki

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