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Operating Results and Forecast

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Consolidated Operating Results for the Fiscal Year Ended March 31, 2017

Overview


In the fiscal year ended March 31, 2017, the Japanese economy saw the positive effects of economic and monetary policies undertaken by the government and the Bank of Japan as well as the yen's ongoing low valuation, which together drove an upturn in corporate production and capital investment and a pickup in consumer spending. Reflecting this, the overall domestic economy enjoyed gradual recovery. Overseas, however, the economic growth continued to slow, especially in emerging nations despite the strength of the U.S. and European economies.

Against this backdrop, the Ryobi Group has been promoting proactive marketing and the development of new products to meet user needs while taking measures to reduce costs, improve productivity and streamline business operations.

Nevertheless, the yen did appreciate compared with the previous fiscal year, with a quelling effect on sales and profit from overseas subsidiaries. As a result, the Company's performance over the period included decreases both in revenues and earnings compared with the previous fiscal year. In addition, the recording of profit attributable to owners of the parent is in part due to a reduction in tax expenses because of a reassessment of the valuation allowance for deferred tax assets derived from net operating loss carryforwards that the Group's U.S.-based subsidiary posted.


Consolidated Earnings
Full-year fiscal 2016 Full-year fiscal 2017 Change
Millions of
yen
% of
net sales
Millions of
yen
% of
net sales
Millions of
yen
%
Net sales 254,508 240,502 -14,005 -5.5%
Operating income 12,832 5.0% 11,875 4.9% -957 -7.5%
Profit attributable to
owners of parent
9,305 3.7% 8,348 3.5% -957 -10.3%


Performance by Industry Segment


The Die Castings Business recorded decreases both in revenues and earnings compared with the previous fiscal year. Despite an overall rise in production volume (by mass), sales fell due to a decline in domestic sales as well as the negative effects of foreign exchange rate fluctuations on revenues from overseas subsidiaries. On the earnings front, domestic profit decreased in step with the decline in domestic sales, while the aforementioned currency fluctuations offset profit from overseas subsidiaries. Reflecting these factors, overall earnings in this business declined.

The Power Tools and Builders' Hardware Business recorded a decrease in revenues and an increase in earnings compared with the previous fiscal year. Sales were down due mainly to a decline in domestic sales of power tools. Nevertheless, earnings grew due to a decrease in the cost of sales ratio thanks to the depreciation of Chinese yuan and the resulting improvement in overall profitability.

The Printing Equipment Business saw a slight increase in revenues and a decline in earnings compared with the previous fiscal year. Thanks to an increase in orders received from Japanese customers for large- and middle-sized printing presses as well as a rise in exports to Europe, overall revenues grew slightly despite a decrease in exports to the United States, China and South Asia. However, earnings decreased in step with a rise in expenses for exhibition and other sales promotional activities.


Net Sales by Industry Segment
Full-year fiscal 2016 Full-year fiscal 2017 Change
Millions of
yen
% of
consolidated
net sales
Millions of
yen
% of
consolidated
net sales
Millions of
yen
%
Die Castings 198,809 78.1% 185,643 77.3% -13,166 -6.6%
Power Tools and
Builders' Hardware
27,076 10.6% 26,162 10.9% -914 -3.4%
Printing Equipment 28,383 11.2% 28,457 11.8% 74 0.3%

Operating Income by Industry Segment
Full-year fiscal 2016 Full-year fiscal 2017 Change
Millions of
yen
% of
segment
net sales
Millions of
yen
% of
segment
net sales
Millions of
yen
%
Die Castings 10,534 5.3% 9,027 4.9% -1,506 -14.3%
Power Tools and
Builders' Hardware
430 1.6% 1,468 5.6% 1,037 241.1%
Printing Equipment 1,848 6.5% 1,358 4.8% -490 -26.5%

Consolidated Financial Statements for Fiscal 2017 < PDF 90KB >



Forecasts for the Fiscal Year Ending March 31, 2018

The Japanese economy is expected to enjoy modest but constant recovery thanks to the effect of economic and monetary policies undertaken by the government and the Bank of Japan. Nevertheless, growth in consumer spending will remain less than robust despite the stable employment market, fostering a sense of uncertainty regarding the future. Overseas, the U.S. and European economies are expected to remain firm. Reflecting this, the global economy will continue to see gradual recovery.

Taking these circumstances into account, the Company's consolidated operating results forecasts (as of May 11, 2017) for the fiscal year ending March 31, 2018, include increases in both sales and operating income compared with fiscal year ended March 31, 2017. However, profit attributable to owners of the parent will be down from the previous fiscal year due to the absence of the lower tax expenses recorded in the fiscal year ended March 31, 2017 thanks to the reassessment of the valuation allowance for deferred tax assets.

In the Die Castings Business, the Company expects that the value of orders received from Japanese customers will remain virtually unchanged from the fiscal year ended March 31, 2017. Overseas, despite an expected sales decrease in North America due to production line replacements that some customers have scheduled for their facilities, the Company forecasts growth in overall revenues in anticipation of sales growth at the two of its manufacturing subsidiaries in China. On the earnings front, the Company expects a rise in earnings from the aforementioned two subsidiaries in China and an improvement in the productivity of a U.K. manufacturing subsidiary, both of which will, in turn, act as positive factors contributing to an overall increase in earnings from the Die Castings Business.

In the Power Tools and Builder's Hardware Business, the Company expects growth in revenues due to such factors as beefed-up marketing activities and the introduction of new products. However, the Company anticipates a decline in overall earnings despite sales-backed profit growth due to a projected year-on-year rise in the cost of sales ratio as the Company has set an assumed Chinese yuan exchange rate for the current fiscal year that is higher than the actual rate announced in the fiscal year ended March 31, 2017.

In the Printing Equipment Business, the Company expects that the value of orders received from Japanese customers will remain virtually unchanged from the fiscal year ended March 31, 2017. However, overall revenues from this business will decrease due to such factors as a decline in sales from customers in elsewhere in Asia. Also, the Company anticipates a slight decline in earnings, reflecting the decrease in revenues and other factors.

For the fiscal year ending March 31, 2018, the Company has set the assumed exchange rates of the Japanese yen against U.S. dollar, GBP, Chinese yuan and Thai baht, at ¥110, ¥135, ¥17 and ¥3.2, respectively.


Consolidated Performance Forecasts
Full-year fiscal 2017 Full-year fiscal 2018
(forecast)
Change
Millions of
yen
% of
net sales
Millions of
yen
% of
net sales
Millions of
yen
%
Net sales 240,502 245,000 4,497 1.9%
Operating income 11,875 4.9% 12,400 5.1% 524 4.4%
Profit attributable
to owners of parent
8,348 3.5% 7,700 3.1% -648 -7.8%


Operating Results for Fiscal 2016