CEO Message

Junya Suzuki, President and CEO

Dear shareholders and investors,

Thank you for your continued support of the Nissha Group.

Operating results for FY2020

During the fiscal year ended December 31, 2020, the global economy was in a severe condition as the outlook remained uncertain due to the impact of COVID-19 pandemic. In the United States and European countries, economic activities, which had been stagnant, gradually resumed; however, the economic recovery was sluggish as new cases of COVID-19 rose again. In China, economic activities significantly diminished, but afterward, the economic recovery trends continued. In Japan, economic activities resumed and demand, mainly from overseas, recovered after the state of emergency was lifted, and accordingly the economy showed signs of picking up.

Under the 6th Medium-term Business Plan, which the Group started to implement in January 2018, we focused on growth by reorganizing and optimizing our business portfolio. We set the markets of mobility (automotive and transport equipment), medical devices and sustainable materials as our focus markets, in addition to the mainstay consumer electronics (IT devices), and aimed to develop well-balanced business bases and enhance our corporate value by implementing the global-based growth strategy.

The fiscal year ended December 31, 2020 was the final year of the 6th Medium-term Business Plan. We took actions to improve profitability mainly by implementing measures to strengthen profitability to prepare for changes in IT devices market conditions. At the same time, we expanded business sites and product lineups through corporate acquisitions in the markets of medical devices and sustainable materials. During the current fiscal year, demand for some products decreased due to the impact of COVID-19; however, demand for IT devices in the Devices segment largely exceeded the initial projection, and demand for mobility components in the Industrial Materials segment started to recover in the second half of the fiscal year after the downturn caused by the impact of COVID-19. Although temporary expenses were incurred in the first half of the fiscal year in relation to measures to strengthen profitability, operating profit for the fiscal year significantly improved thanks to an increase in product demand and the improved production efficiency resulting from continued stable demand and those measures.

As a result, regarding the financial results for the fiscal year ended December 31, 2020, net sales were ¥180,006 million (an increase of 3.4% as compared to the previous year). Operating profit of ¥7,290 million (Operating loss of ¥16,253 million in the previous year) was recorded. Profit attributable to owners of parent of ¥7,069 million (loss attributable to owners of parent of ¥17,183 million in the previous year) was recorded.

Forecast for FY2021

During the fiscal year ending December 31, 2021, the global economy is expected to rebound. However, we have to keep an eye on the effects of rising new cases of COVID-19 on economic activities, impact from fluctuations in financial and capital markets, and other factors.

The next fiscal year is the first year of the three-year 7th Medium-term Business Plan which the Group started to implement in January 2021. By the fiscal year ended December 31, 2020, the Group succeeded in expanding business sites and product lineups through proactive M&A strategy in the markets of medical devices and sustainable materials, and also started supplying film-based Touch Sensors for the mobility (automotive and transport equipment) market. These activities resulted in the development of stronger business bases in our focus markets where we implemented the growth strategy. At the same time, in the consumer electronics (IT devices) market, we worked to improve and maintain profitability and efficiency to offset significant seasonal variations in product demand and lower demand for products due to changes in technological trends.

Under the 7th Medium-term Business Plan, we aim to construct a foundation for growth by fully utilizing the global business bases we have acquired and built so far and maximizing their synergies. In the markets of medical devices, mobiity, and sustainable materials, our goal is to achieve growth by expanding product lineups that will solve social issues. In the IT devices market, we will enhance profitability and efficiency against the downturn trend in the product demand.

In the fiscal year ending December 31, 2021, we expect stable demand for tablets in the Devices segment, while we foresee a slowdown in demand for products for smartphones. In the Industrial Materials segment, we expect that demand for mobility components in the field of decoration and for metallized paper, a sustainable material, will remain firm. In the Medical Technologies segment, demand for contract development and manufacturing services and business media will start to recover from the downturn caused by the impact of COVID-19. For the consolidated financial results for the fiscal year ending December 31, 2021, we expect net sales of ¥169,000 million, operating profit of ¥7,500 million, profit before tax of ¥7,000 million and profit attributable to owners of parent of ¥5,200 million. These figures are based on an exchange rate of 1US$ = ¥105 for the fiscal year ending December 31, 2021.

  FY2020.12 full year
Jan.-Dec.
Results
FY2021.12 full year
Jan.-Dec.
Forecast

Net sales

(Millions of JPY)

180,006 169,000

Operating profit

(Millions of JPY)

7,290 7,500

Profit before tax

(Millions of JPY)

7,051 7,000

Profit attributable to owners of parent

(Millions of JPY)

7,069 5,200

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 which leads corporate value improvement.

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

February 12, 2021
Junya Suzuki
Chairman of the Board
President and CEO

Junya Suzuki

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