Company Name : NGK INSULATORS, LTD. Stock Exchange Listings : Tokyo and Nagoya Listing Code : 5333
URL : http://www.ngk.co.jp/english/ Representative : President Taku Oshima (Mr.)
Contact : General Manager Finance & Accounting Department Hideaki Shindo (Mr.)
(TEL) +81-52-872-7230
October 28, 2016Date of the Filing of Securities Report "Shihanki Hokokusho" (Scheduled) : November 7, 2016 Date of Dividend Payment (Scheduled) : December 2, 2016 Availability of supplementary explanatory materials prepared for financial results : Available
Briefing session on financial results to be held : Yes
(for securities analysts and institutional investors)
(All yen amounts are rounded down to the nearest million.)
Consolidated financial results for the Six months ended September 30, 2016 (From April 1, 2016 to September 30,2016)
(Note) Comprehensive Income
: Six months ended September 30, 2016
(4,418) million yen
ー %
: Six months ended September 30, 2015
23,407 million yen
(25.3)%
Consolidated operating results (Percentage figures represent increase (decrease) from previous period.)
Net Sales
Operating Income
Ordinary Income
Profit attributable to owners of parent
Six months ended September 30, 2016
Millions of yen
%
Millions of yen
%
Millions of yen
%
Millions of yen
%
194,254
(7.8)
34,267
(17.1)
32,357
(19.6)
21,717
(21.0)
Six months ended September 30, 2015
210,582
25.3
41,331
43.7
40,261
49.8
27,488
36.8
Profit per share
Diluted profit per share
Six months ended September 30, 2016
Yen
Yen
67.08
66.97
Six months ended September 30, 2015
84.18
84.03
Consolidated financial position
Total assets
Total net assets
Ratio of net worth to total assets
September 30, 2016
Millions of yen
Millions of yen
%
684,919
395,768
56.2
March 31, 2016
711,897
417,972
57.1
(Reference) Net worth : As of September 30, 2016, 385,115 million yen
: As of March 31, 2016, 406,743 million yen
Dividend payment
Cash dividends per share
First quarter-end
Second quarter-end
Third quarter-end
Year-end
Total (Full-year)
Year ended March 31, 2016
Yen
Yen
Yen
Yen
Yen
-
18.00
-
20.00
38.00
Year ending March 31, 2016
-
20.00
Year ending March 31, 2017 (forecast)
-
20.00
40.00
(Note) Revision of cash dividend forecast during this period : None.
Forecasts of consolidated financial results for the fiscal year ending March 31, 2017
(Percentage figures represent increase (decrease) from previous period.)
Net Sales
Operating Income
Ordinary Income
Profit attributable to owners of parent
Profit per share
Year ending March 31, 2016
Millions of yen
%
Millions of yen
%
Millions of yen
%
Millions of yen
%
Yen
385,000
(11.7)
54,000
(33.2)
54,000
(33.7)
33,000
(38.1)
102.24
(Note) Revision of forecasts of consolidated financial results during this period : Yes.
Notes
(1) Significant changes in subsidiaries during this period (changes in specified subsidiaries, "tokutei kogaisha" defined in the "Cabinet Office
Ordinance on Disclosure of Corporate Information, etc.", involving a change of the scope of consolidation during this period) : None
New
―
company
( ) ,
Exclusion
―
company
( )
Application of special accounting methods for preparing quarterly consolidated financial statements : None
Changes in accounting policies, accounting estimates or retrospective restatements
i.
Changes due to revisions of accounting standards
:
None
ii.
Changes in accounting policies other than the above (i)
:
None
iii.
Changes in accounting estimates
:
None
iv.
Retrospective restatement
:
None
(Note) For details, please refer to "2. Consolidated Financial Statements (3) Notes to Consolidated Financial Statements (Changes in
accounting policy)" on page 8 of the Appendix.
September 30,
2016
327,560,196
shares
March 31,
2016
327,560,196
shares
September 30,
2016
5,948,468
shares
March 31,
2016
981,389
shares
September 30,
2016
323,738,082
shares
September 30,
2015
326,532,728
shares
Number of shares outstanding (Common Shares)
Number of shares outstanding at period end including treasury stocks
Number of treasury stocks at period end
iii.
Average number of shares outstanding over period
*
Presentation regarding the implementation status of review procedures
These financial statements are outside the scope of review procedures in accordance with the Financial Instruments and
Exchange Law of Japan. At the time of disclosure of this report, the review procedures of the consolidated financial statements in accordance with the Financial Instruments and Exchange Law of Japan are in progress.
*
Explanation of appropriate use of results forecasts and other notes
This document contains forward-looking statements that are based on information and certain assumption the Company has
acquired and deemed reasonable as of the time of the release and the Company does not guarantee the achievement of them. Actual future results and trends may differ materially from those in the forecasts due to a variety of factors.
1.
Qualitative Information on Quarterly Financial Statements・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
2
(1) Explanation of Business Results ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
2
(2) Explanation of Financial Position ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
2
(3) Explanation of Forward-looking Statements including Forecasts for Consolidated Financial
Statements・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
3
2.
Consolidated Financial Statements ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
4
(1) Consolidated Balance Sheet ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
4
(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income ・・
6
Consolidated Statement of Income ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
6
Consolidated Statement of Comprehensive Income ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
7
(3) Notes to Consolidated Financial Statements ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
8
(Changes in accounting policy) ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
8
(Additional information) ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
8
(Note on the assumption as a going concern) ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
8
(Significant changes in stockholder's equity)・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
8
(Consolidated Balance Sheet) ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
9
(Segment information)・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
9
-
Explanation of Business Results
During the six months ended September 30, 2016, the Japanese economy remained on a moderate recovery course underpinned by improvements in the employment and income environment, despite some signs of weakness. Overseas economies were robust in developed economies, such as the U.S. and Europe, while China and emerging countries experienced a slowdown in economic growth.
The NGK Group saw sluggish performance in the Power Business Segment due to a lack of large shipments of NAS® (sodium-sulfur) batteries, in addition to a decrease in overseas shipments of insulators. In the Ceramics Business Segment, demand increased for automotive ceramics due to factors including strong sales of passenger cars in the U.S. and European market and increase of small passenger car sales owing to tax reduction measures in China. In the Electronics Busines Segment, demand for ceramic components for semiconductor manufacturnig equipment grew against the backdrop of increased spending on capital investment for 3D-NAND flash memory, concluded by semiconductor manufacturers, while there was a delay in the recovery of demand for ceramic packages.
As a result of the above, combined with the impact of the strong yen, consolidated net sales for the six months ended September 30, 2016 decreased by 7.8% year on year to ¥194,254 million. In terms of earnings, as a result of decreased net sales among other factors, operating income decreased by 17.1% year on year to
¥34,267 million and ordinary income decreased by 19.6% to ¥32,357 million. Profit attributable to owners of the parent decreased by 21.0% to ¥21,717 million as a result of both a decrease in operating income and the recording of an impairment loss on fixed assets of ¥3,205 million as an extraordinary loss.
By segment, the Power Business Segment posted ¥26,395 million in net sales, a decrease of 21.9% year on year, and an operating loss of ¥2,783 million, compared to an operating income of ¥390 million in the same period of the previous year. In the Ceramics Business Segment, net sales increased by 2.8% year on year to
¥119,311 million and operating income increased by 0.4% year on year to ¥35,132 million. In the Electronics Business Segment, net sales decreased by 10.1% year on year to ¥48,604 million and operating income decreased by 67.8% year on year to ¥1,917million.
-
Explanation of Financial Position
As of September 30, 2016, total assets were ¥684,919 million, a decrease of ¥26,978 million from the previous fiscal year-end. This was mainly due to a decrease in the balance of notes and accounts receivable trade and the balance of securities despite increases in cash and bank deposits and inventories.
Total liabilities decreased by ¥4,774 million from the previous fiscal year-end to ¥289,150million.
Total net assets stood at ¥395,768 million, or ¥22,203 million lower than the previous fiscal year-end, due to the repurchase of treasury stock and a decrease in foreign currency translation adjustments.
- Explanation of Forward-looking Statements including Forecasts for Consolidated Financial Statements
Six months ended September 30, 2016 ( from April 1, 2016 to September 30, 2016 )
(Millions of yen)
Business Segment
Elimination or Adjustment
Consolidated
Power
Ceramics
Electronics
Total
Sales
26,388
119,261
48,604
194,254
ー
194,254
Sales to customers
Intersegment sales
7
49
ー
56
(56)
ー
Total sales
26,395
119,311
48,604
194,311
(56)
194,254
Operating income(loss)
(2,783)
35,132
1,917
34,267
ー
34,267
Six months ended September 30, 2015 ( from April 1, 2015 to September 30, 2015 )
With regard to the financial results forecasts for the full year ending March 31, 2017, sales and profits are both expected to fall below previous forecasts as a result of factors including a higher yen than initial assumptions (¥108 to the U.S. dollar and ¥120 to the euro), an expected delay in the major overseas project of insulators in the Power Business Segment until the next fiscal year, and a delay in the recovery of demand for ceramics packages due to delays in investments in mobile phone base stations in China in the Electronics Business.
The consolidated financial results forecasts for the second half of the fiscal year assume that the yen trades at
¥100 to the U.S. dollar and ¥110 to the euro.
(Average exchange rates during the period: ¥103 to the U.S. dollar and ¥115 to the euro)
Forecasts of consolidated financial results for the fiscal year ending March 31,2017 (Millions of yen)
April1, 2016 - March 31, 2017 | Net sales | Operating Income | Ordinary Income | Profit attributable to owners of parent | Profit per share (yen) |
Previous forecast (A) | 410,000 | 60,000 | 63,000 | 44,000 | 136.84 |
Revised forecast (B) | 385,000 | 54,000 | 54,000 | 33,000 | 102.24 |
Change (B-A) | (25,000) | (6,000) | (9,000) | (11,000) | ー |
Change (%) | (6.1) | (10.0) | (14.3) | (25.0) | ー |
For Reference : Results from previous year (the year ended March 31, 2016) | 435,797 | 80,898 | 81,498 | 53,316 | 163.28 |
Above Financial results forecasts are based on information that are currently available and actual results may differ materially from those in the forecasts due to various factors.
2.Consolidated Financial Statements (1)Consolidated Balance Sheet(Millions of yen) | ||
As of September 30, 2016 | As of March 31, 2016 | |
Assets | ||
Current assets | ||
Cash and bank deposits | 125,301 | 97,481 |
Notes and accounts receivable trade | 80,239 | 102,575 |
Securities | 45,186 | 72,503 |
Inventories | 111,171 | 108,945 |
Other | 28,004 | 31,654 |
Allownce for doubtful accounts | (718) | (826) |
Total current assets | 389,184 | 412,333 |
Non-current assets | ||
Tangible assets | ||
Buildings and structures | 65,148 | 62,252 |
Machinery and vehicles | 87,563 | 86,606 |
Other | 53,117 | 56,135 |
Total tangible assets | 205,828 | 204,993 |
Intangible assets | 2,778 | 3,019 |
Investments and other assets | ||
Investment securities | 73,293 | 78,675 |
Other | 14,002 | 13,049 |
Allownce for doubtful accounts | (168) | (174) |
Total investments and other assets | 87,127 | 91,550 |
Total non-current assets | 295,734 | 299,563 |
Total assets | 684,919 | 711,897 |
(Millions of yen)
As of September 30, 2016
As of March 31, 2016
LiabilitiesCurrent liabilities
Notes and accounts payable trade | 35,429 | 36,052 |
Short-term borrowings | 6,037 | 4,549 |
Current portion of long-term borrowings | 3,817 | 20,242 |
Income taxes payable | 4,945 | 7,137 |
Provision for NAS battery safty measures | 4,229 | 5,405 |
Provision for loss related to competition law | 4,004 | 4,307 |
Other | 36,920 | 34,767 |
Total current liabilities | 95,384 | 112,463 |
Long-term liabilities | ||
Long-term borrowings | 152,423 | 139,180 |
Net defined benefit liability | 21,112 | 21,418 |
Other | 20,230 | 20,861 |
Total long-term liabilities | 193,765 | 181,461 |
Total liabilities | 289,150 | 293,924 |
Net assets | ||
Shareholders' equity | ||
Common stock | 69,849 | 69,849 |
Capital surplus | 72,080 | 72,092 |
Retained earnings | 281,766 | 266,580 |
Treasury stock | (12,476) | (1,363) |
Total shareholders' equity | 411,219 | 407,158 |
Accumulated other comprehensive income
Unrealized gain on available -for-sale
securities 20,044 20,832
Deffered gain on derivatives under hedge
accounting | ||
Foreign currency translation adjustments | (32,008) | (5,888) |
Remeasurements of defined benefits plans | (13,959) | (15,358) |
Total accumulated other comprehensive income | (26,104) | (414) |
Stock acquition rights | 944 | 875 |
Non-controlling interests | 9,708 | 10,352 |
Total net assets | 395,768 | 417,972 |
Total liabilities and net assets | 684,919 | 711,897 |
(179) -
(2)Consolidated Statement of Income and Consolidated Statement of Comprehensive Income Consolidated Statement of Income(Millions of yen) | ||
Six months ended September 30, 2016 | Six months ended September 30, 2015 | |
Net sales | 194,254 | 210,582 |
Cost of sales | 128,621 | 136,837 |
Gross profiit | 65,632 | 73,744 |
Selling, general and administrative expenses | 31,365 | 32,412 |
Operating income | 34,267 | 41,331 |
Non-operating income | ||
Interest income | 220 | 351 |
Dividend income | 734 | 813 |
Gain on valuation of derivatives | 393 | 268 |
Reversal of Provision for loss related to competition law | ー | 1,151 |
Other | 568 | 490 |
Total non-operating income | 1,917 | 3,075 |
Non-operating expenses | ||
Interest expense | 1,025 | 993 |
Equity in loss of unconsolidated subsidiaries and associated companies | 296 | 1,047 |
Foreign exchange loss | 2,302 | 1,857 |
Other | 202 | 247 |
Total non-operating expense | 3,827 | 4,146 |
Ordinary income | 32,357 | 40,261 |
Extraordinary income | ||
Gain on sales of fixed assets | 184 | 27 |
Gain on sales of investment securities | 74 | 224 |
Subsidy income | ー | 153 |
Total extraordinary income | 258 | 405 |
Extraordinary loss | ||
Loss on sales and disposals of fixed assets | 124 | 137 |
Impairment loss | 3,205 | ー |
Provision of reserve for loss related to competition law | 1,062 | ー |
Total extraordinary loss | 4,392 | 137 |
Income before income taxes and non controlling interests | 28,224 | 40,529 |
Income taxes -current | 6,839 | 8,808 |
Income taxes -deferred | (340) | 4,037 |
Income taxes - total | 6,498 | 12,845 |
Profit | 21,725 | 27,683 |
Profit (Loss) attributable to non-controlling interests | 7 | 195 |
Profit attributable to owners of parent | 21,717 | 27,488 |
(Millions of yen) | ||
Six months ended September 30, 2016 | Six months ended September 30, 2015 | |
Profit | 21,725 | 27,683 |
Other comprehensive income | ||
Unrealized gain on available-for-sale securities | (786) | (3,416) |
Deferred losses on hedges | (184) | (2) |
Foreign currency translation adjustments | (26,405) | (1,204) |
Remeasurements of defined benefit plans | 1,351 | 298 |
Share of other comprehensive income of associates accounted for by using the equity method | (120) | 48 |
Total other comprehensive income | (26,144) | (4,276) |
Comprehensive Income | (4,418) | 23,407 |
Comprehensive Income attributable to: | ||
Owners of parent | (3,972) | 23,263 |
Non-controlling interests | (446) | 143 |
Not applicable
(Additional information)(Adoption of "Implementation Guidance on Recoverability of Deferred Tax Assets")
Effective from the first quarter of fiscal 2016, the Company adopted the "Implementation Guidance on Recoverability of Deferred Tax Assets" (ASBJ Guidance No. 26, March 28, 2016).
(Receipt of the written verdict from the National Tax Tribunal regarding transfer pricing taxation)
On June 24, 2016, the Company received a written verdict from the Nagoya National Tax Tribunal in response to the following a request for re-examination of a correction submitted by the Company.
With respect to the transactions between the Company and its two overseas subsidiaries from the fiscal year ended March 31, 2006 through the fiscal year ended March 31, 2010, the Company received a correction based on transfer pricing taxation issued by the Nagoya Regional Taxation Bureau in March 2012, and the Company made payment of approximately ¥7.9 billion in tax penalties including local taxes, while filing a complaint. With respect to approximately ¥1.7 billion of the aforementioned tax penalties concerning the transactions with a U.S. subsidiary, the Company received approximately ¥1.4 billion refund in total in Japan and the U.S.upon agreement under a Japan-U.S. Mutual Agreement, which has been reflected in the financial results for the year ended March 31, 2014. On the other hand, with respect to the remaining approximately ¥6.2 billion tax penalty concering the transactions with a Polish subsidiary, the Company requested the cancellation of it and had submitted a request for re-examination of a correction to the Nagoya National Tax Tribunal in August 2014. This decision partially rescinds these corrections, and the amount of corporation taxes, local taxes, etc. to be refunded is approximately ¥ 0.1 billion, part of which has already been refunded.
However, considering the content of the written verdict, the Company still believes its claim is reasonable, and while it is considering taking measures to reclaim the rest of the tax penalty paid, it could still take considerable time for this matter to be resolved. In the meantime, there is a risk of receiving corrections, as remaining differences with the views of the tax authorities, for the fiscal years subsequent to April 1, 2010.
(Note on the assumption as a going concern)Not applicable
(Significant changes in stockholder's equity)The Company acquired 5,000,000 shares of treasury stock based on the resolution at the meeting of the board of directors held on April 28, 2016. As a result, treasury stock increased ¥11,175 million in the six months ended September 30, 2016, and treasury stock as of September 30, 2016 amounted to ¥12,476 million.
(Consolidated Balance Sheet)Contingent liabilities
The NGK Group is subject to an international investigation on the situation of competition.
Since the receiving of a subpoena by a U.S. subsidiary of NGK Insulators, LTD. (NGK) from the U.S. Department of Justice (DOJ) in 2011, NGK has cooperated in the investigation concerning ceramic substrates for catalytic converters including establishing the Independent Committee in 2012. In September, 2015, NGK entered into a Plea Agreement with DOJ, agreeing to pay a fine of US$65.3 million based on charges that it violated U.S. laws including the antitrust law in connection with some transactions for ceramic substrates for catalytic converters, and paid the total amount in November 2015. We have entered into negotiations for compensation for damages with the relevant customers. In addition to some customers requiring monetary compensation, civil lawsuits (class action) have also been filed.
In consideration of such progresses, the NGK Group made an estimate of potential losses, and recognized the estimated amount as of the end of six months ended September 30, 2016, as "provision for loss related to competition law," however, additional losses may arise with the emergence of new facts. Overall details of the investigation and negotiations are not disclosed because they may put the NGK Group at a disadvantage.
(Segment information)(Millions of yen)
Business Segment | Elimination or Adjustment | Consolidated | ||||
Power | Ceramics | Electronics | Total | |||
Sales | 33,795 | 122,723 | 54,063 | 210,582 | ー | 210,582 |
Sales to customers | ||||||
Intersegment sales | 16 | 48 | ー | 64 | (64) | ー |
Total sales | 33,811 | 122,771 | 54,063 | 210,647 | (64) | 210,582 |
Operating income | 390 | 34,979 | 5,962 | 41,331 | ー | 41,331 |
2. Main products by business segment
Business Segment | Main products |
Power | Insulators, hardware for insulator assemblies, current limiting arching horns, bushing shells, fuse cut-outs, APM, line arrester and NAS® (sodium-sulfur) batteries |
Ceramics | Automotive ceramics for exhaust gas purification, corrosion-resistant ceramic apparatuses for chemical industries, gas analyzers, industrial heating systems, refractory products and radioactive waste treatment systems |
Electronics | Ceramic components for semiconductor manufacturing equipment, ceramic components for erectronics, beryllium copper wrought products, and molds |
NGK Insulators Ltd. published this content on 28 October 2016 and is solely responsible for the information contained herein.
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