Consolidated Results for the Second Quarter Ended September 30, 2013

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FAQ Summary of the Question-and-Answer Session at Seiko Epson's Announcement of Consolidated Results for the Second Quarter (ended September 30, 2013).



Q&A summary

Click on the appropriate question to view the answer.

Overall


Q

Why did second quarter operating income increase compared to the same period last year?


Q

Foreign exchange accounted for approximately 60% of the 24-billion yen increase in operating income. The remainder of the increase comes largely from the information-related equipment segment.
Within this segment inkjet printers experienced a significant leap in operating income. This was due to factors such as curtailed shipments of low-end models and maintenance of prices in developed economies, and an increase of unit shipments of high-capacity ink tank models in emerging economies. These measures had the effect of improving the entire inkjet printer model mix and increasing ASPs. We also benefitted from increased consumables net sales.
In the corporate segment we were boosted by patent income, the result of know-how acquired over many years of research and development.


Q

Why are you not revising your second half operating income outlook, despite changing your foreign exchange assumptions?


A

We calculate income currency sensitivity for every single-yen depreciation over the year at positive 100 million yen and 1.1 billion yen for the US dollar and euro respectively.
We have decided to stand by our second half operating income outlook. Although we don't expect major changes to the market environment from the first half in information-related equipment, we raised our outlook for this segment because we will achieve our previous forecast by continuing to pursue our planned strategic actions in inkjet printers and elsewhere, and will then factor in the latest exchange rate assumptions.
On the other hand, we lowered our outlook for devices & precision products because of price erosion in the microdevices business. We also lowered the outlook for sensing & industrial solutions because of delayed rollout of products in new businesses.



Information-related equipment

Q

What are your basic assumptions for the inkjet printer market overall and for Epson's inkjet business?


A

We believe the market will remain flat, with the market contraction in developed economies being offset by growth in emerging regions. Against this, we are standing by our previous outlook for shipments of Epson printers, which is broadly equivalent to the number of units sold last year.


Q

How will Epson's second half outlook be affected if the inkjet printer market shrinks?


A

It's the low end of the market that is shrinking. We don't believe this will have a significant impact on Epson because the composition of our install base is improving as a result of our efforts to curtail sales in that part of the market.
Going forward, our aim is to further improve profitability by boosting sales by developing the markets for high-capacity ink tank models in emerging economies and for office printers.


Q

Consumables net sales have started to improve since the start of the fiscal year. How do you see this situation developing in the second half and in the next fiscal year?


A

The improvements in the composition of the install base are impacting consumables sales. We continue to believe that we will gradually see the benefits of this in our financial results from next year onwards. We will continue to work to improve the composition of our install base.


Q

What measures will you take to boost sales of office inkjets?


Q

We will boost the lineup further with even faster printers. We are also seeking to strengthen our sales channels such as the existing office superstores and also our dealer network.


Q

How is the market for POS-related products developing in North America?


Q

Financial institutions and large retailers form the largest part of the market. The market is sensitive to economic trends so we will keep a close eye on the economy.