This report includes forward-looking statements that are based on management's view from the information available at the time of the announcement. These statements are subject to various risks and uncertainties. Actual results may be materially different from those discussed in the forward-looking statements. The factors that may affect Epson include, but are not limited to, general economic conditions, the ability of Epson to continue to timely introduce new products and services in markets, consumption trends, competition, technology trends, and exchange rate fluctuations.
Assumptions for the forecasts and warnings for users of the forecasts are available on "Qualitative Information Regarding the Consolidated Financial Outlook."
(How to access supplementary explanations and details of briefing on financial results)
The Company is scheduled to hold a briefing for analysts on financial results on Friday, July 30, 2021 and to post materials used at the briefing on the Company's website on that day.
U.S. dollar amounts are presented for the convenience of the readers. This translation should not be construed to imply that the yen amounts actually represent, or have been or could be converted into, equivalent amounts in U.S. dollars. The exchange rate of ¥110.575 = U.S.$1 at the end of the reporting period has been used for the purpose of presentation.
Operating Performance Highlights and Financial Condition
Overview of the Fiscal 2021 First Quarter (April 1 to June 30, 2021)
The global economy as a whole sprang back more robustly than anticipated during the quarter thanks to the waning impact of the pandemic, the rising rate of vaccinations, and added stimulus in the U.S. The situation remained grim in India, Southeast Asia and Latin America, where lockdowns and other restrictions on economic activity were tightened due to the resurgent pandemic, but the recovery in the U.S. and China continued apace. Japan and Europe, held back to some extent by the renewed upturn in infections, saw a slower but steady recovery.
The upswell in demand from the global recovery has put increasingly severe pressure on the supply chain, including marine transport shipment delays from container shortages and port congestions as well as a growing shortfall in semiconductors and other electronic components. The surge in freight rates and parts prices from the lopsided supply/demand balance has been a key factor behind the rise in transport and manufacturing costs and should continue to be closely watched.
The average exchange rates of the yen against the U.S. dollar and of the yen against the euro during the first quarter of the fiscal year were ¥109.46 and ¥131.91, respectively. This represents a 2% depreciation in the value of the yen against the dollar and a 11% depreciation in the value of the yen against the euro, year on year. The yen also weakened against the currencies of some emerging countries, in places such as China and Latin America.
Given this environment, revenue strengthened 46.0% year on year to ¥282.1 billion, rebounding strongly from the pandemic-hit results of the previous year despite the lingering impact of supply troubles from logistical delays and the electronic components shortage. Business profit rose 455.3% to ¥24.2 billion as higher manufacturing costs from surging freight fares and component prices were more than offset by hikes in sales prices from greater home printing demand, reductions in advertising and sales promotion costs, and positive foreign exchange effects. Profit from operating activities was ¥23.6 billion, up 1,052.2% year on year. Profit before tax was ¥23.4 billion, up 1,932.6% year on year. And profit for the period attributable to owners of the parent company was ¥17.4 billion (compared to a ¥0.2 billion loss in the same period last year).
A breakdown of the financial results in each reporting segment is provided below.
The segment breakdown has been changed to conform with the Epson 25 Renewed Corporate Vision beginning with the first quarter. The new segments are Printing Solutions, Visual Communications, and Manufacturing-related & Wearables.
Printing Solutions Segment
Revenue in the home and office printing business grew markedly. High-capacity ink tank printers and ink cartridge printers, though afflicted by ongoing supply constraints from parts procurement difficulties and shipment delays, generated impressive sales growth from sustained home printing demand in developed countries and a steep improvement in demand in emerging countries over last year's pandemic-hit results. Consumables revenue fell from the previous year, when sales were boosted sharply by extra demand. This contrasts with an upturn in serial impact dot matrix printer revenue, which had been damaged last year by a slump in emerging countries sales.
The commercial and industrial printing business enjoyed substantial revenue growth. Large-format inkjet printers had suffered last year due to lockdowns and pandemic restrictions, which had deferred
sales activity and product installations and damaged print demand for store posters and other items, but turned around this year with the launch of new models and renewed consumables demand in Europe and the Americas. POS printers benefited from increased demand from retailers and restaurants, primarily in Europe and the Americas.
Segment profit in the printing solutions segment gained considerably despite the jump in freight fares and other costs, bolstered by sales growth and the positive foreign exchange effects.
As a result of the foregoing factors, revenue in the printing solutions segment was ¥192.3 billion, up 43.1% year on year. Segment profit was ¥26.6 billion, up 55.7% year on year.
Visual Communications Segment
The segment posted buoyant revenue growth over the pandemic-hit results of the previous year as the recovery in the education market and booming home demand easily made up for supply constraints due to parts procurement difficulties.
Segment profit in the visual communications segment grew strongly on higher sales, ongoing cost cuts, and the positive foreign exchange effects.
As a result of the foregoing factors, revenue in the visual communications segment was ¥40.7 billion, up 72.8% year on year. Segment profit was ¥4.4 billion versus a ¥2.7 billion segment loss in the same period last year.
Manufacturing-related & Wearables Segment
Manufacturing solutions revenue increased significantly on higher demand and acquisition of new customer contracts in China and resurgent automobile-related demand in the Europe and the U.S. Revenue in the wearable products business grew on the recovery of global demand mainly in North America and demand for movements.
The microdevices business recorded substantial revenue growth. Quartz crystal device revenues soared on demand for wireless modules and automotive applications along with a widening range of applications, while semiconductors sale picked up on burgeoning demand both at home and abroad.
Profit in the manufacturing-related & wearables segment sharply rose on cost containment in the wearable products business as well as higher sales.
As a result of the foregoing factors, revenue in the manufacturing-related and wearables segment was ¥49.5 billion, up 39.5% year on year. Segment profit was ¥5.6 billion, up 419.1% year on year.
Adjustments to the total profit of reporting segments amounted to negative ¥12.6 billion. (Adjustments in the same period last year were negative ¥11.0 billion.) The main components of the adjustment were basic technology research and development expenses that do not correspond to the reporting segments, and revenue and expenses associated with things such as new businesses and corporate functions.
Liquidity and Financial Position
Assets, Liabilities, and Equity
Total assets at the end of the first quarter were ¥1,160.4 billion, a decrease of ¥0.8 billion from the previous fiscal year end. This decrease was mainly due to a ¥7.6 billion decrease in property, plant and equipment and a ¥5.8 billion increase in inventories.
Total liabilities were ¥598.9 billion, down ¥9.4 billion compared to the end of the last fiscal year. This decrease was mainly due to a ¥4.4 billion decrease in other current liabilities and a ¥2.9 billion decrease in net defined benefit liabilities.
The equity attributable to owners of the parent company totaled ¥561.4 billion, a ¥10.4 billion increase compared to the previous fiscal year end. While Epson recorded ¥17.4 billion in profit for the period attributable to owners of the parent company and ¥3.8 billion in other comprehensive income, the primary component of which was the remeasurement of the defined benefit plan, there were ¥10.7 billion in dividend payments.
Net cash from operating activities during the quarter totaled ¥21.3 billion. The total for the year-ago period was ¥11.8 billion. Whereas Epson recorded a ¥17.4 billion profit for the period, there were negative factors such as a ¥5.3 billion increase in inventories. However, net cash was positively affected by the recording of ¥16.3 billion in depreciation and amortization, ¥5.9 billion in income taxes, and a ¥5.2 billion increase in trade payables.
Net cash used in investing activities totaled ¥11.5 billion (compared to ¥17.3 billion in the same period last year), mainly because Epson used ¥10.7 billion in the acquisition of property, plant, equipment and purchase of intangible assets.
Net cash used in financing activities totaled ¥14.7 billion (compared to ¥10.1 billion in the same period last year), chiefly due to ¥10.7 billion in dividends paid and ¥2.1 billion repayment of lease liabilities. As a result of the foregoing, the balance of cash and cash equivalents at the end of the first quarter totaled ¥299.5 billion compared to ¥180.6 billion in the same period last year.
Qualitative Information Regarding the Consolidated Financial Outlook
The financial outlook for the 2021 fiscal year ending March 31, 2022 is summarized below. The figures in the outlook are based on assumed exchange rates from the second quarter of 108.00 yen to the U.S. dollar and 128.00 yen to the euro.
Consolidated Full-Year Financial Outlook
(B - A)
Profit from operating
Profit before tax
Profit for the period
Profit for the year
attributable to owners
of the parent company
1 USD = ¥106.01
1 USD = ¥107.00
1 USD = ¥108.00
1 EUR = ¥123.67
1 EUR = ¥127.00
1 EUR = ¥129.00
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Seiko Epson Corporation published this content on 30 July 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 July 2021 06:08:20 UTC.