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Latest update: 2007/6/1
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| Results for the Fiscal Year Ended December 31, 2006 |
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The nine-month fiscal period ended December 31, 2006, was the first term of our current Mid-Long Term Management Plan. Since we changed our fiscal year-end from March to December during this business year, the fiscal period for three principal domestic companies was shortened to nine months. Despite the shortened period, HORIBA achieved a year-on-year increase in net sales, surpassing the ¥100 billion mark.
With regard to our business segments; integrating the automotive development test systems (DTS) business, acquired from Germany's Carl Schenck AG in 2005, into HORIBA's Automotive Test Systems segment caused a drop in segment profitability. However, this acquisition has laid the foundation for strong future segment growth.
Earnings in the Analytical Instruments & Systems segment rose significantly as demand for environmental instruments increased. A continuous stream of new product launches in Medical/Diagnostic Instruments & Systems helped the segment recover its profitability. We steadily increased production in the Semiconductor Instruments & Systems segment by successfully leveraging the market boom to realize strong performance.
For the period's results, we posted ¥116.0 billion (US$974.7 million) in consolidated net sales, up 9.9% from the previous year, while operating income was ¥11.7 billion (US$98.2 million), up 3.8%. Despite the shortened fiscal year, net income rose 0.6% to ¥6.5 billion (US$54.6 million) as a result of a decline in special losses and a decrease in the effective tax rate.
During the current fiscal year ending December 31, 2007, we expect to maintain the increase in income and earnings realized by the HORIBA group companies in recent years by focusing management efforts on ensuring that we achieve the targets of the Mid-Long Term Management Plan.
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| Review of the First Year of the Mid-Long Term Management Plan |
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After the announcement of the current Mid-Long Term Management Plan in June 2006, the HORIBA's top management, the heads of its business divisions, and other corporate executives gathered for a global strategy meeting. A host of topics including business strategies and measures to improve brand value and asset efficiency led to lively discussion. During this meeting, I gained a strong sense that our management principle adopted in 2005, "the HORIBA Group is One Company," had transcended traditional barriers between countries and business segments to become firmly embedded within the HORIBA group companies. The most important driving forces that have been carefully cultivated in "the HORIBA Group is One Company" principle are corporate culture, technical capabilities, and, the hardest to foster, communication. However, the fact that our global communication is improving shows we are making good use of our many business resources - resources with the potential to multiply in value. This experience has enhanced my confidence in the long-term growth of HORIBA.
During the fiscal period under review, we also moved to strengthen our management structure and increase operating efficiency. In Japan we merged two group companies, Schenck-TKS Test Systems Ltd. and HORIBA Biotechnology Co., Ltd., into HORIBA, Ltd. Overseas we began operating a second production plant in Shanghai, China with the ability to produce products for all HORIBA group companies and business segments. In Korea, HORIBA, Ltd. made the production facility, HORIBA Korea Ltd., a wholly owned subsidiary and acquired its product sales company.
In this first year of the Mid-Long Term Management Plan, we executed intensive actions to enhance efficient operation by consolidating companies and expanding production capacity.
Another measure we took fosters a sense of unity by promoting acceptance of the HORIBA philosophy within all worldwide HORIBA group companies.
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| Principal Measures for 2007 |
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The slogan adopted for the fiscal year ending December 31, 2007, is "Increase in the HORIBA brand value." We have experienced rapid worldwide growth in recent years by adding companies to HORIBA through M&A, new facilities and implementing other global strategies. Our international growth during these years has raised our foreign employee percentage to 57%. To achieve continued corporate growth, not just in terms of scale but also in a way that maintains quality, it becomes even more important for each and every employee to embrace the "Joy and Fun" motto and our unique corporate culture and spirit. Employees embody the HORIBA culture and spirit into their personal "Omoi" (conviction), and find tangible ways to express and implement our culture and spirit into their daily jobs. One of the tools they use to accomplish this is the  HORIBA Brand Book, published in January this year and distributed to all employees worldwide.
In business operations, HORIBA has significantly strengthened its business activities in the U.S.A key region, the U.S. accounts for around 40% of our market for analytical and measurement equipment, but only 20% of our global sales. I believe that successfully expanding our presence in the U.S. market - the home ground of powerful competitors - is an essential prerequisite to growth as a truly global company. We have, therefore, implemented the "U.S. Strategy Project," to which we are devoting some of our best people. As part of this strategy, we have established a new facility for our semiconductor business in Santa Clara, California, the heart of Silicon Valley, to focus marketing and product development on our U.S. customers.
As our performance has improved over the last few years, HORIBA has attracted considerably more attention from capital markets and the general public, and the aggregate market value of our stock - the leading indication of our corporate value - has been increased. Personally, I am extremely pleased by these developments, while at the same time I feel as if I'm being placed under even more pressure, albeit in a good way. The extent to which employees share this feeling of greater expectation, and whether we are all facing the same way and moving in the same direction, will be key to ensuring the continued growth of HORIBA. Viewed from that perspective, I feel that cultivating globally-oriented, high-quality human resources is indispensable. Short-term performance is significantly impacted by external factors such as markets and the state of the economy. Nonetheless, the value of personnel is an absolute, and holds the promise of continued growth and the creation of value for a company over the medium to long term.
At HORIBA, we will continue to manage with a long-term perspective. I sincerely hope that all our stakeholders understand and agree with our management policies, and will remain with us for many years to come.
April 2007
Atsushi Horiba
Chairman, President & CEO |
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