To Shareholders
We would like to thank our shareholders for their support and commitment.
Below we report on the status of operations and results for the second quarter of the 54th business year (from August 1, 2011, to January 31, 2012) of the Group.
Consolidated Results for the Second Quarter
The electronics industry, of which the Group is a part, saw in the period under review growing shipments of IT equipment, such as high-performance smart phones and tablet PCs, thanks to strong markets for communication devices. On the other hand, in the market for car electronics components, expectations for market growth driven by recovery demand after the Great East Japan Earthquake were disappointed as flooding in Thailand disrupted production, leaving the outlook uncertain. In this environment, the Group engaged in exhaustive business rationalization measures including personnel expense cuts and worked to enhance the efficiency of production frameworks. At the same time, as proactive steps to acquire new orders, efforts were made to strengthen the Group’s capability to respond to customer needs and further raise customer satisfaction.
As a result, consolidated sales revenue for the second quarter posted 3,850 million yen (up 20.2% compared with the year-earlier period). Operating income rose to 203 million yen (compared with a loss of 390 million yen in the year-earlier period), with ordinary income of 235 million yen (compared with a loss of 409 million yen in the year-earlier period), and net income, partly due to the reversal of provisions for retirement benefits, of 606 million yen (compared with a loss of 2,244 million yen in the year-earlier period).
Dividends
We sincerely regret that a year-end dividend will not be paid.
Outlook
The operating environment of the Company appears to have left the worst behind. This assessment of a recovery under way is validated by regional economies, customers, and products, whichever perspective one may choose.
To be sure, domestic markets have been seeing plunging unit prices, but conditions overseas remain strong, specifically in China and the Philippines, where orders have been growing especially in relation to smart phones.
In response to the changing environment, the Company has been working to capture demand at its overseas operations in China and the Philippines. As to specific measures, in China, we will strengthen smart phone related facilities and spot plating lines, and tighten cost control in anticipation of competition from local capital. Furthermore, in the Philippines, we will strive to capture demand from the local affiliates of Japanese companies, and promote line remodeling and facility investments in order to address the scattering of production bases in East Asia that occurred after the flooding in Thailand.
As to the domestic market, despite concerns over the progressing de-industrialization in Japan as customers move their production bases overseas, the Company intends to ride out this development on the strength of the cost competitiveness acquired by shifting to high added-value plating processes and appropriate cost structures, thereby establishing the Company in a position based on the role as a specialized external manufacturer for plating processing.
The Company will persist in its efforts to further solidify its black figures and to meet shareholders’ expectations.
We would like to request the continued support and understanding of our shareholders.
April 2012
Sanno Co., Ltd.
Fuminari Kouyama
President & CEO
