Epson Establishes SE15 Mid-Range Business Plan (Second Half) (FY2012-14)

- TOKYO, Japan, March 15, 2012 -

Seiko Epson Corporation ("Epson," TSE: 6724) today unveiled its new three-year SE15 Mid-Range Business Plan (FY2012-14). The new plan follows SE15 Mid-Range Business Plan (FY2009-11) as the second-half of Epson's strategic plan.

1. Review of the SE15 Mid-Range Business Plan (First Half) (FY2009-11)

Epson has been proceeding in line with SE15 (FY2009-11). This three-year business plan is the first half of a plan designed to achieve the goals Epson set forth in March 2009, in the SE15 Long-Range Corporate Vision, a strategic vision of how the company wants to be in the 2015 fiscal year.
In the past three years the global economy climbed back from the economic crisis triggered by the Lehman collapse before falling back under the weight of events such as the European sovereign debt crisis. In 2011, moreover, the business environment was thrust into further upheaval by the skyrocketing yen and a series of natural disasters, including the devastating earthquake and tsunami in Japan and flooding in Thailand.
Epson's financial performance was significantly impacted by these environmental changes, yet the company still managed to gain traction for growth. This traction is being provided by steady progress in accomplishing the core strategies set forth in SE15 (FY2009-11), which were to expand business domains and product lines and to reduce total costs to dramatically improve the company's cost structure.

2. SE15 Mid-Range Business Plan (Second Half) (FY2012-14)

The new mid-range business plan, SE15 (FY2012-14), is designed to enable Epson to achieve the goals stated in the SE15 Long-Range Corporate Vision, regardless of environmental conditions. Given the results achieved during the past three years under SE15 (FY2009-11), Epson will stay the course and accelerate the execution of strategies.

Business Policies and Basic Strategies

Policy 1: Use Micro Piezo technology to revolutionize printing in every domain.

Epson is seeing the strategies pursued under SE15 (FY2009-11) yield results. Under SE15 (FY2012-14), therefore, the company will accelerate and expand the execution of these strategies. The key to these strategies is Micro Piezo inkjet print head technology. Epson will thus further extend the advantages of this technology (including broad ink and media compatibility and outstanding durability, speed, and accuracy) and deploy it in a broad range of printing segments and revolutionize processes.

Basic strategies
  1. Strengthen competitiveness by dramatically reducing inkjet printer size
    Enhance competitiveness, expand share, and improve profitability of the business as a whole by providing compact inkjet models in all segments and achieving customer value from a cost perspective.
  2. Establish a much stronger presence in the consumer (home) printing market
    Expand Epson's share of the consumer market by making compact, high-performance printers that are easier than ever to set up and use.
  3. Establish a high-profit business model in emerging markets
    Broaden the customer base and establish a business model that generates high margins by strengthening cost competitiveness and expanding the lineup of high-capacity ink tank and monochrome models engineered to customers' needs by leveraging the outstanding durability of Micro Piezo technology.
  4. Revolutionize office printing
    Epson will revolutionize office printing by expanding and enhancing its lineup of inkjet printers equipped with advanced Micro Piezo inkjet systems engineered for even greater durability, speed, accuracy, and ink compatibility, and with even lower power requirements and running costs.
  5. Capture a much larger number of customers in the commercial domain
    By further increasing variations of ink for a diverse range of media, Epson will expand and enhance its product lines and businesses in commercial markets, including in segments such as signage and CAD, as well as in graphics and proofing, where Epson already has a strong presence.
  6. Establish business in the industrial domain
    Epson will further refine its Micro Piezo technology, and establish business in the industrial domain by advancing and upgrading its product lineup for printing items such as labels and textiles.
  7. Steadily grow profits in business systems
    Epson will cement its position as the global market share leader in serial impact dot-matrix (SIDM) printers by capturing new demand in emerging markets. In terminal modules (TM) Epson will steadily grow profits by developing new demand and leading the market forward with, for example, intelligent receipt printers and on-demand inkjet color printing.
Policy 2: Continue creating new realms for projected images and communication with innovative micro-display and optics technologies

Epson will accelerate and expand the strategies pursued under SE15 (FY2009-11), as these strategies have steadily been yielding results. The keys to the strategies are micro-displays, typified by Epson's high-temperature polysilicon TFT liquid crystal panels, and optical technologies. By refining these technologies Epson will increase its competitiveness, and further expand its market share.

Basic strategies
  1. Be No. 1 in all projector segments
    For the office and education segments Epson will provide advanced interactive features, increase usability, and expand and enhance its lineup of entry-level models.
    For the ultra-big screen/ high-lumen and home segments Epson will expand and enhance its product lineup and advance its micro-display and optics technologies to further improve image quality.
    Through these efforts Epson will aim to make its 3LCD projectors No. 1 in every application and region.
  2. Continue creating new categories of products such as head mounted displays (HMDs).
    Further develop the micro-displays and optics technologies that Epson created for 3LCD projectors to establish new categories of products, such as HMDs, that exceed customer expectations.
Devices and Precision Products
Policy 3: Establish businesses in the devices and precision products domain where we can leverage our unique strengths and capture profits from value created by Epson

Under SE15 (FY2009-11) Epson, faced with a difficult operating environment, including a strong yen and declining demand, realigned and rightsized its devices and precision products operations by revamping the cost structure and streamlining operations. Under SE15 (FY2012-14) Epson will leverage the unique strengths of its long-fostered QMEMS and semiconductor technologies to create strong products that offer attractive customer value, thereby shoring up the foundation of the business while expanding the customer base.

Basic strategies
  1. Deploy sensing, low power, and wearable technologies in the health, sports, and medical fields
    In the health, sporting, and medical fields, Epson will help people lead healthier, more secure, fuller lives by combining its technologies to launch products that provide fresh value.
  2. Deploy Micro Piezo, sensing, and precision mechatronics technologies in the factory automation and industrial equipment sectors
    Epson will deploy its strong technologies in both existing and new areas, such as robotics, to spark production process innovations and establish new categories of products that can help customers improve their production efficiency.

Financial Performance Targets

Difficult business conditions are expected to continue due to ongoing concerns about the direction of the global economy, the strong yen, and other factors. Nevertheless, in fiscal 2014 Epson aims to restore net sales to the one-trillion mark and reach ¥70 billion in operating income and 7% ROS by executing the plans in SE15 (FY2012-14) and increasing sales revenue, primarily in the information-related equipment business. Moreover, as shown by the SE15 plan, the company seeks to record 10% ROS and 10% or greater ROE on a continuous basis, assuming net sales growth, in fiscal 2015.

(Unit: billion yen, except where otherwise stated)

FY2012 FY2013 FY2014
Net sales 890.0 940.0 1,000.0
Operating income 35.0 47.0 70.0
ROS 4% 5% 7%
Assumed exchange rate (yen)
1 dollar
1 euro




Key Indicators

Epson will allocate the bulk of capital expenditure to projects in the information-related equipment segment, particularly printing and projection, both of which promise opportunities for expansion and new growth. This will total 140 billion yen over three years.
Epson seeks to generate a cumulative total of ¥80 billion in free cash flows over three years, mainly via efficient investment and a stronger financial structure based on operating income growth.
Epson's policy for shareholder dividends is to reward investors with stable dividends, so for the medium to long-term, the company will look to consistently achieve a consolidated dividend payout ratio of 30%.

FY2012-14 cumulative
Capital expenditure ¥140 billion
Free cash flows ¥80 billion
Shareholder dividends Objective is to consistently achieve a consolidated
dividend payout ratio of 30% over the medium to long-term

About Epson
Epson is a global imaging and innovation leader that is dedicated to exceeding the vision of customers worldwide through its compact, energy-saving, high-precision technologies, with a product line-up ranging from printers and 3LCD projectors for enterprise and the home, to sensors and other microdevices.
Led by the Japan-based Seiko Epson Corporation, the Epson Group comprises more than 78,000 employees in 99 companies around the world, and is proud of its ongoing contributions to the global environment and the communities in which it operates.