27 November 2020

FY 2020 First Half Business Results

IR

On November 6, we announced our business results for the first half of this fiscal year.

The first half of fiscal year 2020 saw a considerable economic deterioration in different countries and regions, such as Japan, the Americas, Europe and Asia, as a result of severe restrictions on economic and social activities amidst the global pandemic of the novel coronavirus. The business environment surrounding our corporate group was also very harsh, largely because of a rapid production decrease in consumer electronics in general, including automobiles and smartphones, delay in communications and power construction projects, and decline in optical fiber prices. Regarding our business results for the first half of this fiscal year on a consolidated basis, net sales were 1.24 trillion yen, a remarkable decrease from the same period of the previous year. To recover our losses as much as possible, we reduced unessential costs, controlled investment in plant and equipment, and introduced other cost reduction measures. However, experiencing not only a net sales decline but also profitability deterioration caused by a rapid decrease in production, we recorded a loss of 11.4 billion yen in net sales, a loss of 24.0 billion yen in ordinary income, and a loss of 41.9 billion yen in profit attributable to owners of the parent.

However, in the second quarter of this fiscal year, automobile production recovered more than expected, leading to an increase in sales of automobile-related products such as wiring harnesses. In addition, we implemented thorough cost improvement measures. Consequently, the figures of net sales and all the other items indicating our business results for the second half of this fiscal year were above the forecast figures that we announced when releasing our business results for the first quarter of this fiscal year.

For the fiscal year 2020 full-year business forecast, although there are uncertain future elements, such as the effect of the novel coronavirus, we have decided to make an upward revision in net sales to 2.80 trillion yen; operating income to 70.0 billion yen; ordinary income to 61.0 billion yen; and profit attributable to owners of the parent to 15.0 billion yen. Behind this revision is our consideration that the business results for the first half of this fiscal year were above the forecast figures that we announced when releasing our business results for the first quarter and that current automobile production is on a recovery track.

The business environment is harsh both in Japan and overseas, and all the more for this, I'm strongly calling on employees to return to the starting point and further raise the levels of SEQCDD (safety, environment, quality, cost, delivery, and research and development), which constitute the basics for us as a manufacturer. While continuing to place our top priority on the health and safety of our employees and the establishment and maintenance of the supply chain, we will flexibly accept changes in the environment, "reorganize our business structure to improve profitability" and "transform our ways of working in order to improve productivity," thereby striving to establish a corporate structure robust enough to withstand any environment.

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