CEO Message

Dear shareholders and investors,

Thank you for your continued support of the Nissha Group.

Operating Results for the 1st Quarter Ended March 31, 2020

During the three months ended March 31, 2020, the global economy was initially on a gradual recovery trend but switched to a slow down because of the spread of novel coronavirus (COVID-19) infections. The United States and European economies faced downward pressure as their economic activities were reduced following the measures taken to suspend business operations and restrict movements and immigration. The Chinese economy also slowed down as its economic activities significantly diminished. The Japanese economy was in difficult conditions because of downward pressure on its economy, such as sluggish consumer spending and weak corporate earnings.

The Group is currently operating the Sixth Medium-term Business Plan (three-year plan), centering on growth by reorganizing and optimizing its business portfolio. We have set the markets of mobility (automotive and transport equipment), medical devices and sustainable packaging materials as our focus markets, in addition to the mainstay consumer electronics (IT), and aim to develop well-balanced business bases and enhance our corporate value by implementing the global-based growth strategy. During the three months ended March 31, 2020, demand for the mainstay consumer electronics (IT) products progressed steadily although there was some negative impact from COVID-19. In addition, we completed a corporate acquisition in the sustainable packaging materials market, which started to make a contribution to our business results.

As a result, regarding the financial results for the three months ended March 31, 2020, net sales was ¥39,474 million (an increase of 8.4% as compared to the same period of the previous year). Operating profit was ¥1,082 million (operating loss of ¥2,458 million in the same period of the previous year). Profit attributable to owners of parent was ¥870 million (loss attributable to owners of parent of ¥2,957 million in the same period of the previous year).

Overcoming COVID-19

We take actions against COVID-19. We try hard to prevent spread of COVID-19 by several actions such as restriction of business travels and enhancing working from home for those who belong to non-production departments. At the same time at production sites, we try the best effort to keep stable supply for our customers, for instance, by checking body-temperature of employees at factory entrances, by setting up of disinfection process to quickly act just for the case, and so on.

Our production operation has been active overall so far. While our business spreads out to several and various markets, especially medical devices, metallized paper as packaging materials for beverages and foods, and electrical components for smartphones and tablets are categorized as essential products under the situation and the production for these products has been stably active on the whole. On the other hand, as decorative interior parts for automotive industry and business media for commercial establishments are not treated as essential, the production operation for these products has been slowdown.

As another topic related to COVID-19, we started to supply face shields to address the shortage of medical supplies, which has been a pressing social issue under the situation. We did not have it as our general product line-up but succeeded execution of the 1st delivery in 2 weeks from scratch, by the collective effort over the business units of Industrial Materials and Medical Technologies. In China, we supplied precision nozzles in very short term, which is a substantial part of production facilities for high-quality unwoven fabrics for professional-use surgical masks.

Forecast for the 1st Half and the Full Year of FY2020

For the consolidated business forecast for the first half of FY2020, we have reviewed the latest demand trends, taking the results for three months ended March 31, 2020, impacts of novel coronavirus (COVID-19) and other factors in consideration. Net sales are expected to increase compared to the previous forecast because demand for tablets and others progresses more than initially expected while some product demand falls below the original forecast owing to COVID-19.

In addition to the impact of the increase in net sales, operating profit is expected to exceed the previous forecast mainly due to the improvement of production efficiency by increase in demand, and the effect of cost reduction. As a result, profit before tax and profit attributable to owners of parent are also expected to outweigh the previous forecast.

There is no change to the business results forecast for FY2020 (January, 1, 2020 to December 31, 2020), announced on February 14, 2020.
  FY2020.12 H1
(Jan.-Jun.)
Previous Forecast
FY2020.12 H1
(Jan.-Jun.)
Revised Forecast
FY2020.12 full year
(Jan.-Dec.)
Forecast
(No Change)

Net sales

(Millions of yen)

75,000 77,000 166,000

Operating profit

(Millions of yen)

-6,000 -4,000 -2,000

Profit before tax

(Millions of yen)

-6,300 -4,200 -2,700

Profit attributable to owners of parent

(Millions of yen)

-6,900 -5,200 -3,500

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.

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

May 13, 2020
Junya Suzuki
Chairman of the Board
President and CEO

Junya Suzuki

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