FY2016 1Q Financial Results - Topconglobal.topcon.com/invest/library/financial/fr2016/pdf/...FY2016 1Q Financial Results July 29, 2016 TOPCON CORPORATION Director and Executive Officer,

FY2016 1Q Financial Results July 29, 2016 TOPCON CORPORATION Director and Executive Officer, CFO General Manager of Accounting & Finance Div. Haruhiko Akiyama

©2016 Topcon Corporation 1

FY2016 Full Year Plan

Ⅲ Appendix

Ⅰ FY2016 1Q Financial Results

Ⅱ

CONTENTS

FY2016 1Q Financial Results


Ⅰ. FY2016 1Q Financial Results Ⅰ-1. FY2016 1Q Financial Results

Ⅰ-2. Overview of 1Q


FY2016 1Q <On a recovery trend>

Net Sales

0.0

1.0

2.0

3.0

4.0

0

10

20

30

FY20131Q

FY20141Q

FY20151Q

FY20161Q

Sales declined by the strong yen but operating income remained steady

Practically, the sales and profits increased w/o FX effects

Operating Income

1.7

27.6 26.4 24.1

0.7 0.7 0.7

26.2

28.6

Net Sales w/o FX effects

Operating Income w/o FX effects

POC: - Significant improvement in operating income - Good sales of IT Construction SIB: Strong sales and profit ECB: Growth in sales and profit

1.1

1Q Sales Trend Net Sales

(billion yen) Operating Income (billion yen)

POC=Positioning Company/ SIB=Smart Infrastructure Business/ ECB=Eye Care Business


FY2016 1Q Financial Results <Increased sales and profits in FY15 exchange rate>

[Consolidated]

FY2015/1Q FY2016/1Q

Actual Actual YoY FY15 Exchange Rate Conversion

Conversion YoY

Net Sales 27,593 26,228 -1,364 28,604 1,011 Gross Profit (Gross Profit Ratio)

14,594 (52.9%)

14,238 (54.3%) -355

SGA 13,830 13,502 -327 Operating Income (Operating Income Ratio)

764 (2.8%)

736 (2.8%) -27 1,159

(4.1%) 395

Non-Operating Income (Expenses) -83 -1,176 -1,092 -104 -21

Ordinary Income 680 -439 -1,120 1,053 373 Extraordinary Income (Loss) 0 -56 -56 Income Before Income Taxes and Minority Interests 680 -495 -1,176

Net Income 139 -783 -923 211 72

Exchange Rate (Average)

US$ ¥121.34 ¥109.07 ¥-12.27 ¥121.34 EUR ¥133.86 ¥122.47 ¥-11.39 ¥133.86

*The previously reported amount in FY2015 Q1 to Q3 is retrospectively adjusted by determining provisional accounting of business combination.

Exchange loss in foreign currency A/R 1.1 billion yen

Tentative valuation loss by exchange rate on June 30th (¥102.91/$)

(unit: million yen)


FY2016 1Q Financial Results by Business <Profitability of Positioning is on a recovery track>

[Consolidated] FY2015/1Q FY2016/1Q

Actual Actual YoY FY15 Exchange Rate Conversion

Conversion YoY

Net Sales

Positioning 14,386 12,831 -1,554 14,214 -172 Smart Infrastructure 7,086 6,590 -495 7,103 17 Eye Care 7,887 8,799 912 9,544 1,657 Others 1,203 790 -412 809 -394 Elimination -2,969 -2,783 185 -3,065 -96 Total 27,593 26,228 -1,364 28,604 1,011

Operating Income

(Operating Income Ratio)

Positioning 561 (3.9%)

745 (5.8%) 184 818

(5.8%) 257

Smart Infrastructure 410 (5.8%)

295 (4.5%) -115 418

(5.9%) 8

Eye Care 468 (5.9%)

461 (5.2%) -6 739

(7.7%) 271

Others -69 (-5.7%)

-123 (-15.6%) -54 -123

(-15.2%) -54

Goodwill Amortization -607 -643 -36 -695 -88

Total 764 (2.8%)

736 (2.8%) -27 1,159

(4.1%) 395

(unit: million yen)


Domestic and Overseas Sales (YoY, at constant currency)

FY2015/1Q

FY2015/1Q

FY2015/1Q FY2015/1Q FY2016/1Q FY2016/1Q

FY2016/1Q

FY2016/1Q

・ POC: IT Construction continues strong growth. IT Agriculture declined in YoY basis, but show signs of having bottomed out. ・ ECB: Strong sales in screening business

- ECB: Strong sales

- ECB: Increase in the glasses shop sales

8.1 8.3 4.4 4.0 8.5 7.7

2.1

111％ 98％ 105％

133％

1.6

- SIB: Strong sales

FY2015/1Q FY2016/1Q

3.2 3.0

107％

- SIB, ECB: Strong sales

FY2015/1Q FY2016/1Q 1.7

105％

1.6 - POC, ECB: Strong sales - SIB: Market stagnation in Middle East

Japan North America

Europe

China Asia/Oceania Others

POC=Positioning Company/ SIB=Smart Infrastructure Business/ ECB=Eye Care Business

(Billion yen) (Billion yen) (Billion yen)

(Billion yen) (Billion yen) (Billion yen)


0.7

0.2 0.2

1.1

-0.4

0.7

0.0

0.5

1.0

1.5

FY2015 1Q Sales increase anddecrease,

Product mix

Fixed cost/Lowering COGS

FX Effects FY2016 1Q

(unit: Billion yen) FY2016 1Q FY2015 1Q

[Consolidated]

Substantive Operating Income

FY2016 1Q Operating Income Breakdown <The sales and profits increased practically w/o FX effects>


Ⅰ. FY2016 1Q Financial Results Ⅰ-1. FY2016 1Q Financial Results

Ⅰ-2. Overview of 1Q


Overview

Review of 1Q Financial Results

Positive factors Operation is on a recovery trend Reduction of fixed cost and lowering COGS are on schedule

Expecting its contribution from 2Q

ー Negative factors Impacts of strong yen - Sales decrease: -2.4 B yen, Operating income decrease: -0.4 B yen

Exchange rate (YoY): JPY/ USD… ¥12.27 higher, JPY/EURO… ¥11.39 higher

- Non-Operating Expenses (Exchange loss in foreign currency A/R): -1.1 B yen

Tentative valuation loss by exchange rate on June 30th (¥102.91/USD)


Positive Factors The demands in the U.S. and European construction markets are

steadily increasing IT construction achieved strong growth due to the release of

major new products (YoY 115%)

ー Negative Factor IT Agriculture: the sales fell in year-on-year basis, but it seems it

had bottomed out


Topic

■ Partnership with Volvo (Released on May 18) - Announced the agreement on 3D machine control solution

Overview



Positive factors Sales expansion by World’s smallest/ lightest new Total Station (YoY125%) Sales increase in growing India’s market (YoY170%)

Negative factors Deterioration of Middle East market conditions (decrease of crude oil prices/

geopolitical risk)

■Joint development for concrete deterioration diagnosis system with Maeda Corporation - Enable to estimate amount of salt particles on concrete surface by utilizing near-infrared light - Enable to observe wide area measurement effortlessly

Topics

■Opened Kobe Training Center(Japan) - Following to Fukushima, 2nd training center was opened in Kobe to promote ”i-Construction” - Planning to open 3rd training center in Kyushu by end of this year

Overview

* "i-Construction" is a registered trademark of National Institute for Land and Infrastructure Management, MLIT, JAPAN.



Overview of Each Business

Positive factors US Strong sales of screening business (115% increased) EU Sales growth of OCT in UK, France and Spain (115% increased) China Optical shop sales grew (240% increased)

■ Partnership with IBM (Press release: 24th June) - Creating charging business model in ophthalmology medical industry - Collecting data with ifa EMR+Analyzing big data with IBM Watson Health

Topic

ー Negative factors FDA clearance delay of 3D OCT-1 Maestro approved on 29th July (JST) Sluggish market in Middle East and South America

■ 3D OCT-1 Maestro - US FDA clearance on 29th July (JST)


Assist on diagnosis and prescription

Forming the partnership with IBM(NYSE: IBM)

Subscription

A Subscription Business Model in Eye Care business

Advantage of Vendor Neutrality: Possible to integrate any data used in the medical sites


FY2016 Full Year Plan Ⅱ.


FY2015 Result Transition and FY2016 Full Year Plan

0.0

5.0

10.0

15.0

0.0

50.0

100.0

150.0

1Q 1H FullYear

1Q 1H FullYear

130.7 130.0

8.8

0.7

10.5

0.7

Target figure in FY2016 has been set as a-must figure 1Q has marked better than FY15-1Q Although facing with FX impacts, we can cover it.

61.0

26.2

62.9

27.6 3.7

Actual Plan

FY2015 FY2016

4.5

USD 121.34 121.50 120.16 109.07 109.47 109.71

EUR 133.86 134.60 132.36 122.47 123.55 124.22

Exch

ange

Rat

e

(JPY)

(1Q+2Q) (1Q+2Q)

Net Sales (billion yen)

Operating Income (billion yen)


［Consolidated］

FY2015 FY2016 1H Full Year 1H Full Year

Actual Actual Plan YoY(%) Plan YoY (%)

Net Sales 62,933 130,735 61,000 97% 130,000 100%

Operating Income (Operating Income Ratio)

4,466 (7.1%)

8,803 (6.7%)

3,700 (6.1%)

83% 10,500 (8.1%)

119%

Ordinary Income 3,866 7,366 3,000 78% 9,000 122%

Net Income＊1 2,272 4,197 1,400 62% 5,000 119%

ROE 6.9% 8%

ROIC 5.4% 6% Dividends ¥12 ¥24 ¥8 ¥16

Exchange Rate＊2

(Average)

US$ ¥121.50 ¥120.16 ¥109.47 ¥109.71

EUR ¥134.60 ¥132.36 ¥123.55 ¥124.22

FY2016 Full Year Plan (unit: million yen)

＊1 According to change in Japanese Accounting Standards, the former Net Income is shown as "Profit (loss) attributable to owners of parent" on financial statements.

＊2 Assumed exchange rate after July 2016 is ¥110/US$, ¥125/EUR


［Consolidated］ FY2015 FY2016

1H Full Year 1H Full Year

Actual Actual Plan YoY(%) Plan YoY (%)

Net Sales

Positioning 31,445 61,977 29,000 92% 59,000 95%

Smart Infrastructure 16,231 32,989 15,500 95% 33,500 102%

Eye Care 19,510 43,834 20,000 103% 45,500 104%

Others 2,820 4,997 2,500 89% 5,000 100%

Elimination -7,073 -13,063 -6,000 -13,000

Total 62,933 130,735 61,000 97% 130,000 100%

Operating Income

(Operating Income Ratio)

Positioning 1,714 (5.5%)

2,385 (3.8%)

1,500 (5.2%) 88% 4,000

(6.8%) 167%

Smart Infrastructure

1,883 (11.6%)

3,909 (11.8%)

1,500 (9.7%) 80% 4,000

(11.9%) 102%

Eye Care 2,058 (10.5%)

4,850 (11.1%)

2,000 (10.0%) 97% 5,000

(11.0%) 103%

Others 94 (3.3%)

196 (3.9%)

0 (0.0%)

200 (4.0%) 102%

Goodwill Amortization -1,284 -2,538 -1,300 -2,700

Total 4,466 (7.1%)

8,803 (6.7%)

3,700 (6.1%) 83% 10,500

(8.1%) 119%

FY2016 Full Year Plan (unit: million yen)


Topcon for Human Life 医・食・住


Appendix Ⅲ.


7.1

9.1

6.9

9.9

6.6

0.4

1.5

0.6

1.5

0.3 0.0

1.0

2.0

3.0

0.0

5.0

10.0

FY15/1Q 2Q 3Q 4Q FY16/1Q

Net SalesOperating Income

Net Sales (billion yen) Operating Income (billion yen)

1. Consolidated

7.9

11.6 9.8

14.5

8.8

0.5

1.6

0.5

2.3

0.5 0.0

1.0

2.0

3.0

0.0

5.0

10.0

15.0

20.0

FY15/1Q 2Q 3Q 4Q FY16/1Q



2. Positioning

3. Smart Infrastructure

14.4 17.0

13.3

17.3

12.8

0.6 1.1

-0.7

1.4 0.7

-1.0

0.0

1.0

2.0

3.0

0.0

5.0

10.0

15.0

20.0

25.0

FY15/1Q 2Q 3Q 4Q FY16/1Q



27.6

35.3

28.6

39.2

26.2

0.7

3.6 -0.3

4.7

0.7 -1.0

1.0

3.0

5.0

7.0

9.0

0.0

10.0

20.0

30.0

40.0

FY15/1Q 2Q 3Q 4Q FY16/1Q



4. Eye Care


Financial Results (Quarterly)


59.4 69.2 62.9 67.8

61.0 69.0

5.9

10.1

4.5 4.3 3.7

6.8

0.0

5.0

10.0

15.0

0.0

20.0

40.0

60.0

80.0

100.0

FY14/1H FY14/2H FY15/1H FY15/2H FY16/1H FY16/2H



15.6 18.3

16.2 16.8 15.5 18.0

2.2

3.7

1.9 2.0 1.5

2.5

0.0

2.0

4.0

0.0

10.0

20.0




27.4 31.3 31.4 30.6 29.0 30.0

2.9 3.7

1.7

0.7

1.5

2.5

0.0

2.0

4.0

0.0

10.0

20.0

30.0

40.0




1. Consolidated

18.6

22.7 19.5

24.3

20.0

25.5

1.5

3.6

2.1 2.8

2.0

3.0

0.0

2.0

4.0

0.0

10.0

20.0

30.0




2. Positioning

3. Smart Infrastructure 4. Eye Care


Financial Results and Forecast (Semiannually)


These materials contain forward-looking statements, including projections of future operating performance. Such statements are based on management’s best judgment, given the materials available to them at the time these statements are made. However, please be aware that actual performance may differ from projected figures owing to unexpected changes in the economic environment in which we operate, as well as to market fluctuations. The original disclosure in Japanese was released on July 29, 2016 at 16:30(UTC+9).

Inquiries: Corporate Communication Div. Public, Investor Relations and Shareholder Relations Dept. TOPCON CORPORATION Tel: +81-3-3558-2532 E-mail: [email protected] URL: http://global.topcon.com/invest/

Cautionary Note regarding Forward-Looking Statements

Documents

FY2016 1Q Financial Results - Topconglobal.topcon.com/invest/library/financial/fr2016/pdf/...FY2016 1Q Financial Results July 29, 2016 TOPCON CORPORATION Director and Executive Officer,