Crystal Technology: Smart Innovation

Crystal Technology: Smart Innovation ANNUAL REPORT 2013 Report for the Fiscal Year Ended March 31, 2013 A LEADER IN THE FIELD OF QUARTZ CRYSTAL ELECTRONIC COMPONENTS NIHON DEMPA KOGYO PROFILE Nihon Dempa Kogyo Co., Ltd. (NDK), was founded in 1948 as a company spe- cializing in the manufacture of quartz crystal devices, based on its business philosophy of “contributing to the prosperity of society and world peace through our service to customers.” The NDK Group supplies crystal devices that serve as indispensable “oscil- lation sources with superior stability” in a wide range of products, including telecommunications devices, such as smartphones, audiovisual/office-automation equipment, and car electronics products. Through these business activities, the NDK Group has developed top-class technological capabilities and has earned one of the top global market shares in its industry. To maintain the high levels of trust of its stakeholders, the NDK Group man- ages its businesses soundly and with a high level of transparency. As evidence of this, the Group has become the first company in Japan to adopt the International Financial Reporting Standards (IFRS) in the preparation of its financial statements. As a company striving for excellence in manufacturing based on the slogan of “quality first,” the NDK Group is also taking active initiatives to promote the growth of its business activities, by assisting its customers in the development of their businesses and to contribute to the building of afflu- ent societies. The NDK Group’s Global Network The NDK Group has 19 sales bases and 8 manufacturing plants around the world. Through this global network, the Group is well posi- tioned to be responsive to its customers, providing them with advice and service. Asia/Japan Americas Europe s Head Office l Sales Base n R&D Center n Production Facility CONTENTS Editorial Policy Beginning with its fiscal 2013 01 Financial Highlights 13 Financial Section reporting initiative, the NDK Group is presenting its Annual Report in 02 To Our Shareholders 21 Corporate History/Guide to NDK’s Website two sections. These are the Annual 06 NDK at a Glance 22 Overview of the NDK Group/Directory Report 2013 (this publication) on the Company’s business and other 08 NDK Is Pioneering the Future 23 Investor Information activities and the Annual Report 2013 Financial Section, which con- 10 Contributing to a Sustainable Society tains detailed financial information 12 Board of Directors and is available solely in PDF form at the following URL: http://www.ndk.com/en/ir/report/ Forward-Looking Statements Statements made in this report with respect to our current plans, estimates, strategies, and beliefs and other statements that are not historical facts are forward-looking statements about our future performance. These statements are based on management’s assumptions and beliefs in light of information currently available to it. We caution that a number of important risks and uncertainties could cause actual results to differ materially from those discussed in the forward-looking statements, and therefore you should not place undue reliance on them. You also should not rely on the belief that it is our obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Risks and uncertainties that might affect us include, but are not limited to, fluctuation of currency exchange rates, overall supply and customer demand in the industry, product development and production capacities, performance of affiliated companies, and other risks and uncertainties. 04 NIHON DEMPA KOGYO ANNUAL REPORT 2013 FINANCIAL HIGHLIGHTS Nihon Dempa Kogyo Co., Ltd. and Consolidated Subsidiaries For the years ended March 31, 2013 and 2012 Thousands of U.S. dollars Millions of yen (Note) 2013 2012 2013 Net sales ¥50,623 ¥50,804 $538,256 Operating income 112 2,081 1,190 (Loss)/Income before income tax (159) 1,615 (1,690) Net (loss)/income (412) 1,759 (4,380) Net (loss)/income attributable to owners of the parent (412) 1,759 (4,380) Total comprehensive income for the period 1,316 1,863 13,992 Total assets 71,367 67,216 758,819 Total equity 27,047 26,123 287,581 U.S. dollars Yen (Note) Per Share Data: Net (loss)/income: Basic ¥(21.01) ¥89.66 $(0.22) Diluted — 89.66 — Cash dividends applicable to the period 20.00 20.00 0.21 Note: The figures are presented in accordance with International Financial Reporting Standards. The U.S. dollar amounts represent translations of Japanese yen amounts at the rate of ¥94.05 to U.S.$1.00, which was the rate prevailing on March 31, 2013. Net Sales Operating Income/(Loss) (Millions of yen) (Millions of yen) 80,000 10,000 60,000 0 40,000 –10,000 20,000 –20,000 0 –30,000 ’09 ’10 ’11 ’12 ’13 ’09 ’10 ’11 ’12 ’13 Net (Loss)/Income Total Assets, Total Equity, and Equity Ratio (Millions of yen) (Millions of yen) (%) 10,000 80,000 80 0 60,000 60 –10,000 40,000 40 –20,000 20,000 20 –30,000 0 0 ’09 ’10 ’11 ’12 ’13 ’09 ’10 ’11 ’12 ’13 Total Assets (left) Total Equity (left) Equity Ratio (right) NIHON DEMPA KOGYO ANNUAL REPORT 2013 01 TO OUR SHAREHOLDERS Toshiaki Takeuchi, Chairman, CEO, and Representative Director Hiroshi Takeuchi, President and Representative Director Review of Fiscal 2013 In fiscal 2013, which ended March 31, 2013, the NDK Group had to make adjustments in production because of the prolonged economic downturn in Europe, the deceleration in the Chinese economy, and the boycot- ting of Japanese products in China because of territorial issues surrounding the Senkaku Islands. In addition, although a trend toward yen depreciation emerged at the end of the fiscal year, the yen continued to be strong for the fiscal year as a whole, thus creating a harsh environment for NDK’s operations. Amid this market environment, the NDK Group focused on expanding sales of new and high-value-added products as well as capturing high market shares in growth markets. NDK also continued its initiatives to reduce manufacturing costs and restructure its production systems; however, the pace of recovery in orders weakened, and improvement in profitability was delayed because of price competition worldwide. In particular, although sales of crystal oscillators for use in automotive systems remained firm, demand for devices used in smartphones was below the forecast levels, and sales of Temperature Compensated Crystal Oscillators (TCXOs) showed only a slight increase. In addition, demand for high-precision crystal oscillators for mobile phone base stations was stagnant as European countries remained in an economic downturn. Sales of components for audiovisual/office-automation (AV/OA) products were adversely affected by production cutbacks among Japanese producers of televisions and other digital equipment products and reductions in output of PCs as demand shifted to tablet-type devices. These adverse conditions, together with falling prices of components along with increased competition, resulted in lower overall sales than in the previous fiscal year. 02 NIHON DEMPA KOGYO ANNUAL REPORT 2013 In addition, as a result of deterioration in yields of certain products, an increase in valuation losses on inven- tories, and other factors, the Group’s consolidated net sales for the fiscal year amounted to ¥50,623 million, a decrease of 0.4% from the previous fiscal year. The Group reported operating income of ¥112 million, 94.6% below the previous fiscal year, and a loss before income tax of ¥159 million, compared with income before income tax of ¥1,615 million in the previous fiscal year. The Group reported a net loss of ¥412 million, versus net income of ¥1,759 million in the previous fiscal year. A sharp depreciation of the yen produced a foreign exchange gain of ¥1,629 million on contributions from foreign operations. The overall result was total comprehensive income for the Group of ¥1,316 million, down 29.4% from the previous fiscal year. Among our management performance indexes, our ratio of operating income to net sales was 0.2%, and the return on equity attributable to owners of the Company (ROE) ratio was minus 1.6%. Targets for Fiscal 2014 We are anticipating moderate economic recovery in fiscal 2014, ending March 31, 2014, because of recovery in the United States and the emerging economies, including China. We are also expecting an increase in domes- tic demand in Japan and improvement in the environment for exports, as the correction of the overvaluation of the yen has made progress. Under these conditions, we intend to step up our Companywide activities and work together to strengthen profitability, mainly by lowering the Group’s break-even point through reductions in fixed and variable costs as well as the implementation of a growth strategy based on the launching of new products to secure profitability. During fiscal 2014, we are currently forecasting ¥51.0 billion in consolidated net sales, 0.7% higher than in fiscal 2013, operating income of ¥1.5 billion, income before income tax of ¥1.1 billion, and net income of ¥1.0 billion. Priority Policies Strengthening Profitability by Lowering the Break-Even Point The market environment is changing at a faster pace than expected, and, looking ahead, we must be prepared for continuing uncertainty in the operating environment. It will be indispensable for us to further increase our capabilities for dealing with the changes in the market. Specifically, to reduce fixed costs, we will cut our capital investment approximately in half to ¥2.3 billion, compared with actual capital investment in the previous fiscal year of ¥4.7 billion, by using equipment already in place to the maximum extent.

Load more