Consolidated Results for the Full Year Ended March 31, 2014

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FAQ Summary of the Question-and-Answer Session at Seiko Epson's Announcement of Consolidated Results for the Full Year (ended March 31, 2014).



Q&A summary

Click on the appropriate question to view the answer.

Overall


Q

What was the impact on your FY2013 financial results of the increased demand in advance of the Japanese consumption tax hike?


Q

Increased demand for inkjet printer cartridges before the tax hike and replacement demand for Windows XP PCs benefitted operating income by approximately 4 billion yen.
We will proceed prudently to ensure there is no negative reaction on our FY2014 results.


Q

Are you planning to revise your updated SE15 Second-Half Mid-Range Business Plan in the light of the FY2013 financial results?


A

Although the exchange rates have fluctuated in the past year, Epson's goals as expressed in the SE15 Long-range Corporate Vision remain the same. In FY2014, the second year of our plan, we will proceed with our basic strategy of realigning our product portfolio and business models, and expanding into new business domains.


Q

Why was net income higher than net income before income taxes in FY2013?


A

Our financial results recovered significantly in FY2013. After carefully considering these results and the outlook for the following year, Epson reviewed the prospects for recovering deferred tax assets, and decided to record the part that it considers recoverable as deferred tax assets. This resulted in a large decline in tax expenses, which had a positive impact on income.


Q

Why is there a 19-billion-yen difference between business profit (85 billion yen) and operating profit (104 billion yen) in the IFRS FY2014 full-year outlook?


A

This is mainly because Epson revised its defined benefit corporate pension system from April 1, 2014, resulting a 20-billion-yen decline in expenses associated with retirement benefit obligations. Under IFRS, this has a one-off impact on FY2014 operating profit, whereas under J-GAAP this amount is recorded as a decrease in labor costs spread over five years.
* Business profit (IFRS) is similar to operating income (J-GAAP). We are disclosing this information to allow investors to better evaluate Epson's performance.


Q

What will be your foreign exchange sensitivity in FY2014?


A

For every one yen depreciation, the operating income (J-GAAP) impact will be plus 0.2 billion yen for the US dollar and plus 1.2 billion yen for the euro.


Q

What is your dividend outlook for FY2014?


Q

We forecast dividends of 70 yen per share. Although it's true to say we have only partially achieved our medium-term target of a dividend payout ratio of 30%, we will continue striving to boost our financial performance and achieve this target as early as possible.



Information-related equipment

Q

What will be the main focus of your inkjet printer business in FY2014?


A

We will be looking to sow the seeds for medium-term growth by implementing measures such as investing in additional production capacity for the PrecisionCore print heads that will form the core of our next generation of office inkjet printers, commercial inkjet printers and industrial printing systems. We will also invest in sales promotions and advertising aimed at expanding our new businesses as we seek to steadily increase profitability.


Q

Please explain your strategy to increase sales of office inkjet printers?


A

We will use our current lineup as a base to successively launch new models with improved functions and features. We'll also expand our existing sales channels and develop new ones.


Q

What are the prospects for your high-capacity ink tank models going forward?


Q

We will continue with our efforts to expand sales in emerging economies such as China, Southeast Asia, Latin America, the Middle East and Russia where we believe there is still scope for growth due to strong demand for low cost printing. During FY2014 we expect these products to comprise approximately 30% of overall Epson inkjet printer volume.


Q

What are your expectations for sales of consumer inkjet printers going forward?


Q

We will continue to launch attractive models as we proceed with our shift to higher end models and seek to raise our presence in the market.