Market: Metalcutting Machine Tools
12 April 2016
Star Micronics reported net sales for the year ended February 29, 2016 increased 6.9% to 54,457 milllion yen ($502.2 million), net income down 20.8% to 3,720 million yen.According to the company, during the fiscal year ended February 29, 2016, the U.S. economy exhibited a steady recovery trend, and Europe continued to experience a modest positive turnaround. In Asia, the pace of economic growth in China and Southeast Asia slowed. In Japan, the economy continued to recover at a moderate but sluggish pace.In the major markets in which the Star Micronics Group operates, while demand for machine tools was robust during the first half, the market experienced a downward trend over the second half. In the Special Products Segment, the POS-related markets experienced weak demand in the U.S. and Europe. In the markets related to precision products, there was strong demand for wristwatch components.The exchange rate during the fiscal 2016 reflected a depreciation of the yen against the U.S. dollar and an appreciation of the yen against the euro compared with the previous fiscal year. Amid environment, the Star Micronics Group reported an increase in sales led mainly by growth in the Machine Tools Segment. Taking into account the added favorable effects of depreciation in the value of the yen, consolidated net sales climbed 6.9% compared with the corresponding period of the previous fiscal year to ¥54,457 million. From a profit perspective, operating income came to ¥5,735 million, an increase of 4.7% year on year. Due to the incidence of a foreign exchange loss totaling ¥880 million recorded as a non-operating expense and other factors, ordinary income declined 15.4% compared with the corresponding period of the previous fiscal year to ¥5,206 million and net income amounted to ¥3,720 million, down 20.8% year on year.In CNC automatic lathes, sales increased in the U.S. This was largely due to firm sales in the medical equipment-related sector and the weak yen. In Europe, sales were steady compared with the corresponding period of the previous fiscal year, mainly on the back of solid sales in the automotive-related sector. Sales grew significantly in the Asian market, which was largely attributable to strong sales in the automotive-related sector, mainly in East Asia. In Japan, sales saw a slight decrease.This in part reflected the downturn in demand following the end of a round of government subsidies over the second half. As a result, sales and profits increased substantially in the Machine Tools Segment, with sales rising 10.3% compared with the corresponding period of the previous fiscal year to ¥38,150 million and operating income improving 8.2% year on year to ¥5,843 million.Sales of wristwatch components increased due to strong sales to wristwatch makers. Despite a boost from the weak yen, sales of non-wristwatch components declined slightly due to a slump in sales of components for HDDs. As a result, while sales in the Precision Products Segment increased 2.1% compared with the corresponding period of the previous fiscal year to ¥4,926 million, Operating income declined 14.3% year on year to ¥593 million.In fiscal 2017, the fiscal year ending February 28, 2017, the global economy as a whole is forecast to remain shrouded in uncertainty. While the U.S. is expected to experience firm growth, there are concerns that worldwide economic conditions will be impacted by such factors as a slowdown in the pace of economic growth in emerging markets including China. Under these circumstances, in consolidated business performance for the coming fiscal year, the Special Products Segment is expected to continue to show increased sales of mobile POS printers mainly. Sales are projected to decline in the Machine Tools Segment. This is largely due to a slump in orders from the Asian market, which enjoyed substantial growth in the fiscal year under review, in addition to the mainstay European market. While trends in wristwatch components are forecast to remain firm, sales of non-wristwatch components are expected to decline in the Precision Products Segment.As a result, the Group is forecasting net sales of ¥48,800 million, a decrease of 10.4% year on year. On the earnings front, the Group forecasts operating income of ¥4,500 million, a decrease of 21.5% year on year, and ordinary income of ¥4,700 million, down 9.7% year on year. Profit attributable to owners of the parent is projected to increase substantially, by 12.9% year on year, to ¥4,200 million. These projections assume a foreign exchange rate of ¥115 to $1, and ¥125 to 1 euro.