Hoya : Presentation for the three months ended Mar.31, 2023 (with Transcript) (1.33MB)

HOYA CORPORATION

Q4 Financial Results Briefing for the Fiscal Year Ending March 2023

May 8, 2023

[Number of Speakers]	3
Eiichiro Ikeda	Director, Representative Executive Officer, President & CEO
Ryo Hirooka	Director, Representative Executive Officer & CFO
Tomoko Nakagawa	Executive Officer & Chief Sustainability (ESG) Officer

Presentation

Moderator:

Today's presenters are Director, Representative Executive Officer, and CEO, Mr. Ikeda; Director, Representative Executive Officer, and CFO, Mr. Hirooka; and Executive Officer and Chief Sustainability Officer, Ms. Nakagawa.

Today, Mr. Hirooka will first give you the Q4 results, main business results, and then Mr. Ikeda and Ms. Nakagawa will talk about our initiatives over the past 12 months. Then we would like to have a Q&A session, and end at 4:00 PM.

Then I would like to hand it over to CFO, Mr. Hirooka.

Hirooka: Without further ado, I would like to talk about the Q4 results. As for the overall figures, JPY185.8 billion was the revenue. Also, there was a 3% increase on a constant currency basis.

Pretax profit was minus 4% on a constant currency basis or JPY54 billion in operating profit was JPY53.4 billion.

Now as for the operating profit, we increased and the net profit actually decreased, and we would like to explain the reasons behind their ups and downs. The largest factor is in Q4 last year where there was a JPY3.1 billion of ForEx gain. In Q4 2022, JPY900 million of ForEx losses, and so the difference is the largest. Therefore, the operating profit constant currency basis positive. However, net profit was a negative. Other than the translational impacts, there are ups and downs depending on the items.

As for the overall business, there are two points that I would like to refer to. FY22 was very robust, increased both revenues and profit. As for information technology, amidst the difficult environment,

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we were able to successfully do cost management and control our profit. Life care achieved both an increase in revenue and profit which led the Group total to an increase in both revenue and profit.

Next, I would like to talk about the results for each business segment.

First, as for life care business, JPY125 billion or plus 18% and plus 11% on a constant currency basis to JPY24.5 billion of profit before tax and profit margin was 21.2% and operating profit was plus 34%, plus 27% on a constant currency basis. I would like to come back to this by product, but life care overall increased its revenue. It was a double-digit increase, not only Q4, but on an annual basis revenues were plus 8% on a constant currency basis.

Looking at the year as a whole, sales were plus 8% on a currency neutral basis, and we have been able to grow in the high single digits in this environment. In the current fiscal year, we are increasing sales promotion, and R&D expenses including clinical trials, etc., and making investments accordingly, but we were able to absorb these expenses and exceed 20%, which is one of our profit margin targets for the year.

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Now I would like to talk about the individual products.

First, as for eyeglass lenses on a constant currency basis, plus 13%. We were able to grow by more than double digit. Sales in China and US grew a lot. As for China, lockdown in December and January, there was expansion of infection. However, amidst these concerns, we were able to grow in Q1. Last Q4 was difficult in the US. However, we were able to gain good revenues, and we were able to acquire good sales from chain stores. However, the business is not limited to these two countries as far as eyeglass lenses. It was a very good quarter overall.

Three months ago in Europe, we were concerned that there may be some risks. In December or in January, the sales were not very good. However, as a result, in Europe, we were able to grow our revenues. In Asia and in Japan as well, we were able to grow in the mid-single digits.

Next, as for contact lenses, we were able to grow 10% YoY. Q4 of last year, there was still an impact of COVID, so there was some recovery impact as well, but the human traffic, if human traffic becomes active, then contact lenses consumption goes up. The market has recovered, if you would. We are tracking the total number of contact lenses being used, but the situation has recovered close to a pre- COVID level. The market has recovered, and we are taking measures to capture this opportunity.

Next, endoscopes. On a constant currency basis, it was flat. The situation varied depending on country. In Europe, it remained firm. However, in the US, there were some weaknesses observed, so altogether, plus 0%. The shortage of the semiconductor supply has been mitigated and is in the direction to be resolved. Of course, this will not be resolved overnight, so it will be a gradual recovery.

Next, intraocular lenses. On a constant currency basis, it was a 16% growth. The largest factor is China. Amidst the COVID regulation and amidst expansion of infection, sales used to be very slow. However, from February onwards, sales have recovered. This is not limited to China, but intraocular lenses showed similar trends to eyeglass lenses. In various markets, sales were recovering. In Japan, compared to last year where there was still impact of COVID, we were able to grow by double digit, so IOL business is in a very good shape.

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Next, and although the value is not very big as for other medical equipment (including artificial bones), we are able to grow by double digits.

As a result, we were able to grow the overall life care business double digits in Q4. Considering the nature of the business, it's very difficult to grow in double digits sustainably, but in 2023, we would like to make investments in our SG&A as well as R&D. Although the profit margin of 20% will remain the same, we would like to continue to grow sales by at least mid-single digits to the higher single digits.

Next is IT business at JPY59.6 billion in revenue, which is negative by 10% on a constant currency basis and pretax profit, JPY28.8 billion and operating profit, JPY28.2 billion. This was a YoY down of 5% and minus 10% on a constant currency basis. This was a larger negative compared to the revenue.

However, we were able to control the cost well, and the margin was 47.2%. The profit margin has remained at a high level. In spite of the sluggish sales by cost control, we have been able to continue to maintain a high level of margins.

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