Financial Results for the Half Year Ended September 30, 2000
Hitachi Koki Co., Ltd.
Shinagawa Intercity Tower A, 15-1, Konan 2-chome, Minato-ku
Tokyo, 108-6020, Japan
Listed on the 1st section of the Tokyo and Osaka Stock Exchanges (Code No.: 6581)
October 31, 2000 - Hitachi Koki released the financial results for the six months ended September 30, 2000.
Summary of Consolidated Financial Statements for the Half Year Ended September 30, 2000
In millions of yen, except per share data
| Half years ended September 30* | Year ended March 31 | ||
| 2000 | 1999 | 2000 | |
| Net sales | 65,913 | - | 128,234 |
|---|---|---|---|
| Operating income (loss) | 1,430 | - | (656) |
| Recurring profit (loss) | 451 | - | (2,096) |
| Net income (loss) | 2,375 | 7,500 | (11,964) |
| Net income per share | |||
| Basic | 19.3 | - | (97.22) |
| Diluted | 19.14 | - | - |
* 2000 is the first year for which half-year consolidated data is available.
Consolidated Financial Condition
In millions of yen, except per share data
| Half years ended September 30 | Year ended March 31 | ||
| 2000 | 1999 | 2000 | |
| Total assets | 147,674 | - | 157,878 |
|---|---|---|---|
| Shareholders' equity | 90,889 | - | 97,673 |
| Shareolders' equity ratio | 61.50% | - | 61.90% |
| Shareholders' equity per share | 738.51 | - | 793.64 |
Consolidated Cash Flows
In millions of yen
| Half years ended September 30 | Year ended March 31 | ||
| 2000 | 1999 | 2000 | |
| Cash flows from operating activities | (1,159) | - | (1,964) |
|---|---|---|---|
| Cash flows from investing activities | (4,512) | - | 1,478 |
| Cash flows from financing activities | (1,103) | - | 1,375 |
| Cash and cash equivalents | 22,695 | - | 29,480 |
The Scope of Consolidation and Items Relating to the Application of the Equity Method
Changes in the Scope of Consolidation and Items Relating to the Application of the Equity Method
Expected Results of Operations in the Fiscal Year Ending March 31, 2001
In millions of yen
| Net sales | 130,000 |
| Recurring profit | 1,200 |
| Net income | 3,700 |
Management Policy
1.Basic policy
The basic management policy of Hitachi Koki is to contribute to social and economic well-being by developing and introducing new products based on superior technologies nurtured within the company. We supply products renowned for ease of use and safety in three distinct groups - power tools, printing systems and scientific instruments. Hitachi Koki regularly introduces timely and attractive new products oriented to emerging customer needs and supports these and all our products with dedicated sales and service. While carrying out structural and managerial reforms to improve our operational efficiency and competitiveness, we are also endeavoring to strengthen the consolidated management system by bolstering cooperation among the company's operational groups. In order to be No. 1 worldwide in every product field and operational area in which we compete, we will continue to develop new products and maintain our proprietary technologies at the highest international levels.
2.Measures relating to the reform of the Company management organizational structure
Partly because of the deterioration of the economic environment and business climate, the Company ran deficits at the net income level for two consecutive years, in the year ended March 31, 1999, and the year ending March 31, 2000. But the Company emerged above the break-even point in the 6-month term ended September 30, 2000, as we carried out drastic reforms in the organization and management effective on April 1, 2000. The reforms (previously described in the 2000 Annual Report) included
As a result, we began to run profits in the 6-month term ended September 30, 2000. We expect that our operation will be in the black also on the full-year basis ending March 31, 2001.
3. Medium- and long-term strategies
To attain a full recovery, we have mapped out a medium-term management plan to run through March 31, 2003. In this plan we have adopted an aggressive management policy, casting aside the previous defensive posture in a full-scale reform of the management, company organization and operations.
Targets
We are carrying out measures to drastically improve managerial efficiency, strengthen the consolidated group management, bolster cost competitiveness and upgrade new-product development capability. Our targets in fiscal 2002 are sales of ¥160 billion, operating profits of ¥11 billion, recurring profits of ¥9 billion and net income of ¥4.5 billion, all on a consolidated basis.
Measures to attain targets
Implementation of efficient management
Reinforcement of consolidated group management
Reinforcement of cost competitiveness
Strengthening of new product development capability
4.Target managerial indicators
By carrying out the above measures under the medium-term management strategy and expanding sales while cutting costs, we will improve our consolidated profitability and raise the rate of recurring profits to sales on a consolidated basis in fiscal 2002 to 5% or over.
5. The Company's basic policy on profit distribution
We determine the payout ratio (the ratio between dividends for our shareholders and appropriation as retained earnings) basically by considering from a comprehensive viewpoint such factors as the needs of future business projects, the results of operations and financial conditions.
We strive to make efficient distribution of retained earnings through prioritized investment in core products and technologies and equipment for streamlining operations.
Regarding the interim dividends for the six-month term ended September 30, 2000, we have decided to pay ¥4 per share after consideration of the above factors.
6. Basic policy of relationships with Hitachi group companies
Hitachi, Ltd., our biggest shareholder, holds about 23% of our shares issued and outstanding. The aggregate holding of our shares by companies of the Hitachi group is about 32%.
As is evident from the shareholder relations, the Company as a member of the Hitachi group has close relations with Hitachi, Ltd. We cooperate with Hitachi, Ltd., in the development of new printers and entrust sales of some of our printers to Hitachi. We always operate in close cooperation with Hitachi.
One out of our eight directors and two out of four auditors double as officers at Hitachi, Ltd.
Management Policy
During the six-month term ended September 30, 2000, the Japanese economy again failed to attain a full-fledged recovery even though it showed some stirrings of spontaneous recovery supported by capital investment, because consumer spending and housing investment remained stagnant. Overseas, the United Statesf economy continued to do well, and there was general economic expansion in Europe and Asia, but with signs of slowdown in certain regions.
In such an environment, Hitachi Koki Co., Ltd. made great strides toward of a higher level of managerial efficiency under the new three-group system introduced during the term. In order to bolster the earning power on a consolidated basis, we actively strengthened our cost competitiveness, research and development and design capability, and expanded our selling power.
As a result of these and other efforts, the Company's consolidated sales during the six-month term ended September 30, 2000, were ¥65,913 million. On the earnings side, recurring profits were ¥451 million, showing an improvement thanks to an increase in sales and reductions in materials costs and other expenses, and net income was ¥2,375 million, marking a return to the black.
Each group's performance was as follows:
Power Tools
The business climate was generally harsh, but power tool sales totaled ¥38,314 million as products used in capital investment did well on the domestic market and exports to the United States were strong.
Printing Systems
Domestic sales were stagnant, but exports were strong, so sales reached ¥25,879 million.
Scientific Instruments
The group did well on both domestic and export markets, led mostly by centrifuges, because research into life science and biotechnology became brisk. Sales reached ¥1,720 million.
Regarding the prospect for the Japanese economy in the second half of the current fiscal year, capital investment will increase but there are uncertainties about public investment, consumer spending and housing investment. Overseas, there are fears of a U.S. economic slowdown. Therefore, optimism must remain guarded.
Turning to the full-year outlook, we believe that sales will be ¥130 billion, consisting of ¥79 billion from power tools, ¥47.4 billion from printing systems and ¥3.6 billion from scientific instruments, that recurring profits will reach ¥1.2 billion and net income will be ¥3.7 billion, all on the consolidated basis.
Cautionary Statement: The documents and other material available on Hitachi Koki's corporate website may contain forward-looking statements with respect to future events and performance. Terms such as "anticipate", "believe", "expect", "estimate", "intend", "plan", "project" and similar expressions may identify forward-looking statements. Actual results may differ materially from those projected or implied in such forward-looking statements and from any historical trends. Such forward-looking information involves risks and uncertainties that could significantly affect expected results. Forward-looking statements may also be based upon assumptions of future events which may not prove to be accurate.