CEO Message

Dear shareholders and investors,

Thank you for your continued support of the Nissha Group.

Operating Results for the Third Quarter Ended September 30, 2018

Junya Suzuki, President and CEO

Recent protectionist economic policies and related trade frictions caused growing uncertainties about the future of the global economy during the nine months ended September 2018. Despite these uncertainties, the global economy remained strong in real terms.
The American economy continued to recover, driven by increased consumer and capital spending. At the same time, the economy in Europe has been experience an ongoing gradual recovery, while the economies of China and other Asian nations are showing signs of a rebound. The Japanese economy continued to recover gradually throughout the period.
The Nissha Group is executing our Sixth Medium-Term Business Plan, launched January 1, 2018. Under this plan, we have defined four key markets, consisting of consumer electronics (IT), automotive, medical devices, and high-function packaging materials. Further, we aim to reconfigure and optimize our business portfolio, achieving greater balance through global growth strategies that maximize the business foundations we have acquired and developed. As we entered the third quarter of the fiscal year, our Devices Business Unit broke free from a first-half cycle of weakness, experiencing growing demand. Our Medical Technologies Business Unit has started to contribute to our earnings growth strategy through acquisitions of other companies.
As a result, the net sales for the nine months ended September 30, 2018 were ¥140,860 million (an increase of 9.2% as compared to the same period of the previous year). EBITDA was ¥8,966 million (an increase of 15.7% as compared to the same period of the previous year). Operating profit was ¥1,958 million (operating loss of ¥434 million in the same period of the previous year). Ordinary profit was ¥1,395 million (ordinary loss of ¥426 million in the same period of the previous year). Profit attributable to owners of parent was ¥451 million (loss attributable to owners of parent of ¥2,211 million in the same period of the previous year).

*Nissha Co., Ltd. changed our consolidated fiscal year end from March to December in the last fiscal year. The transition period for the prior consolidated fiscal year was the nine-month period between April 1, 2017 to December 31, 2017. For comparison purposes, figures for the nine months ended September 2018 are compared with the nine-month period from January 1, 2017 through September 30, 2017.
**Given the growth of our global business and overseas consolidated subsidiaries, the Nissha Group added EBITDA as a key performance indicator in our Sixth Medium-Term Business Plan (launched January 1, 2018). We calculate EBITDA as the sum of operating income, depreciation, and amortization of goodwill.

Earnings Forecast for the Fiscal Year Ending December 2018

Entering the second half of the fiscal year, our mainstay Devices Business Unit experienced an increase in demand. We expect this business to continue to drive earnings. While demand for products in our Industrial Materials Business Unit were somewhat weak, we project growth in our Medical Technologies Business Unit, driven by the contribution of acquired businesses.

We have made no changes to our fiscal 2018 earnings forecasts as previously announced. We forecast net sales of ¥217 billion, EBITDA of ¥20 billion, operating income of ¥10.2 billion, and ordinary income of ¥9 billion. We project profit attributable to owners of parent to amount to ¥7 billion.

In Conclusion

Our mission is to use the diverse capabilities of our people and the core technologies of the Nissha Group to develop economic and social value, enriching the lives of others. Guided by this mission, we are executing our medium-term business plan to achieve a balanced business and improved corporate value.

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

November 7, 2018
Junya Suzuki
Chairman of the Board
President and CEO

Junya Suzuki

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