Consolidated Results for the Third Quarter Ended December 31, 2013

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FAQ Summary of the Question-and-Answer Session at Seiko Epson's Announcement of Consolidated Results for the Third Quarter (ended December 31, 2013).



Q&A summary

Click on the appropriate question to view the answer.

Overall


Q

What are the reasons for the increase in Q3 operating income compared to the same period last year?


Q

Operating income increased compared to last year as we made progress in implementing our strategy in each business. Foreign exchange accounted for approximately 12.6 billion yen of the 14.9 billion yen year-on-year increase in operating income. The remainder of the increase was primarily in the information-related equipment segment. Within this segment, inkjet printer profitability benefitted from improved consumables sales, and from higher ASPs resulting from our efforts to maintain inkjet printer selling prices as we strengthened the competiveness of our hardware, and from an improvement in the model mix driven by growth of high-capacity ink tank models for emerging markets. The business systems and visual communications businesses also contributed to the bottom line due to increased unit volume.


Q

What are your assumptions for Q4?


A

Overall operating income will decline in Q4. In the companywide segment we do not plan to record income from intellectual property as we did in the previous year. In addition we have had to review our expectations for the devices & precision products segment in the light of the changes in the microdevices market environment. On the other hand, we expect operating income in the information-related equipment segment to improve by 4 billion yen compared to last year. Here, inkjet printer profitability will improve as we make further progress in achieving our strategic goals, and the visual communications business will generate income through increased sales.


Q

What is your policy regarding shareholder returns?


A

Epson believes in actively sharing its profits with shareholders. In the light of our decision to upwardly raise our full-year business outlook and in consideration of the company's overall financial situation, we have decided to raise our year-end dividend to 37 yen and our total dividend outlook for the year to 50 yen.
Going forward, our policy is to reward shareholders with a stable dividend payout ratio of 30% over the medium term. We will therefore strive to improve and stabilize our business results, and steadily move to a system where we link dividend payments to these results.



Information-related equipment

Q

How are inkjet printer sales?


A

Q3 total inkjet printer unit sales were slightly below plan due to aggressive pricing by competitors in the year-end selling season. Despite this, we were able to improve the model mix because of our competitive lineup, and because sales of high-capacity ink tank printers and office inkjet models were basically in line with the plan.
Consumables sales were on plan, although there was some variation by country and region


Q

Do you expect unit sales of high-capacity ink tank models to increase from next year onwards?


A

This fiscal year we increased sales of these products by expanding our product lineup and also the number of countries and regions where they are sold. Although we can't give you details as we are still formulating plans, we believe there are opportunities for growth as customers are highly evaluating the cost performance of our printers versus page printers.


Q

How do you see consumables sales from the next fiscal year onwards?


Q

We expect flat or slightly increasing demand in the printing market, including both inkjet and page printers.
Epson, however, will accelerate its strategy to rollout inkjet printers into the office with the aim of increasing consumables sales in the medium term.