Review of Operations
During the consolidated fiscal year ended March 31, 2015, the automobile industry in Japan saw a decline in the number of new vehicles sold for the first time in four years, due to a downturn in reaction to the hike in the rate of consumption tax. Meanwhile, there were strong sales of new vehicles in the US and China, with a year-on-year increase.
Amid these market conditions, the Clarion Group strengthened its Intelligent Safety business, focused on automatic driving and parking, and its Connectivity business as the pillars of future growth. At the same time, the Group took steps to further strengthen the state of its business, working to strengthen its operations and implement restructuring from a global perspective.
In the fiscal year ending March 31, 2015, the Group recorded consolidated sales of ¥198,627 million, an increase of 3.8% year-on-year, due in part to a year-on-year increase in sales to OEM markets in Europe and China, growth in "security and safety" related products, and gains on foreign currency conversion.
With regard to income, consolidated operating income increased 6.0% year-on-year to ¥5,545 million as a result of improvement in the capacity utilization rate due to higher revenues, as well as efforts to cut costs.
Consolidated net income fell 31.1% year-on-year to ¥2,304 million due to an increase in special severance payments and tax expenses, among others.
Results by geographic segment (excluding intra-Group transactions) are as follows.
Sales of new vehicles in Japan saw a continued year-on-year decline due to the impact of the consumption tax hikes, causing a drop in sales to both the OEM market and aftermarket due to delayed recovery in these markets. Despite an increase in sales of camera-related products in the "safety and security" area, overall there was a decline in revenues. With regard to income, we had to report reduced income due to factors including an increase in the purchase cost of overseas products resulting from the weaker yen, and an increase in the development cost burden.
As a result, segment sales amounted to ¥96,485 million, down 4.8% year-on-year. Segment income decreased 57.6% to ¥827 million.
■ United States
There were solid sales of new vehicles in the US, and both revenues and income rose due in part to the weaker yen and stronger dollar compared with the previous year.
As a result, segment sales amounted to ¥61,556 million, up 8.8% year-on-year. Segment income increased 19.0% to ¥1,345 million.
Despite a slump in the European economy, both revenues and income rose due to an increase in sales to OEM markets on the back of a recovery in automobile sales, as well as the weaker yen and stronger euro compared with the previous year.
As a result, segment sales amounted to ¥16,073 million, up 24.1% year-on-year. Segment income increased 125.4% to ¥421 million.
■ Asia and Australia
There was a decline in sales of OEM markets in Thailand – which had been strong the previous year – but there was significant growth in sales of OEM markets in China. With regard to earnings, capacity utilization improved due to the higher revenues, boosting income.
As a result, segment sales amounted to ¥24,511 million, up 19.8% year-on-year. Segment income increased 66.2% to ¥3,008 million.
The figures contained in this report with respect to Clarion’s plans and strategies and other statements that are not historical facts are forward-looking statements about the future performance of Clarion. Such statements are based on management’s assumptions and beliefs in light of the information currently available to it and involve risks and uncertainties. Actual results may differ from those in the forward-looking statements as a result of various factors. Potential risks and uncertainties include, without limitation, general economic conditions in Clarion’s market.
Current assets at the fiscal year-end decreased ¥771 million, or 1.1%, compared with the previous fiscal year-end to ¥70,166 million. In spite of a ¥3,244 million increase in trade notes and accounts receivable, a ¥1,563 million increase in cash on hand and in banks, and a ¥1,184 million increase in inventories, short-term loans receivable fell ¥6,666 million.
Property, plant and equipment, net, increased ¥1,987 million, or 7.5%, from the previous fiscal year-end to ¥28,331 million. Intangible assets increased ¥1,995 million, or 9.7%, from the previous fiscal year-end to ¥22,651 million due mainly to the purchase of software. Investments and other assets increased ¥695 million, or 9.3%, from the previous fiscal year-end to ¥8,143 million. As a result, total assets at the year-end increased ¥3,907 million, or 3.1%, compared with the previous fiscal year-end to ¥129,292 million.
Total liabilities decreased ¥2,365 million, or 2.5%, from the previous fiscal year-end to ¥95,137 million. This was primarily the result of a decrease in long-term borrowing of ¥1,703 million and long-term other accounts payable of ¥611 million. Total net assets increased ¥6,273 million, or 22.5%, from the previous fiscal year-end to ¥34,154 million. This was due to the recording of a net profit for the year and an increase in the foreign currency translation adjustment account of ¥3,427 million. As a result, the net assets ratio was 26.3%, an improvement of 4.2 percentage points from the previous fiscal year-end.
Net cash provided by operating activities was ¥10,838 million (¥10,418 million in the previous fiscal year), as an increase in accounts receivable and a decrease in notes and accounts payable was offset by such factors as the recording of income before income taxes and minority interests and depreciation and amortization.
Net cash used in investing activities was ¥3,611 million. This was due mainly to payment for purchases of property, plant and equipment as well as payment for purchases of intangible assets. Net cash used in investing activities in the previous fiscal year was ¥9,683 million.
Net cash used in financing activities was ¥6,275 million due primarily to repayment of long-term borrowing, despite some income from long-term loans. Net cash used in financing activities in the previous fiscal year was ¥959 million.
As a result of these factors, cash and cash equivalents at the end of the year amounted to ¥8,049 million compared with ¥6,486 million at the previous fiscal year-end.